Evelyn Doane - William Raveis Real Estate - Cape Cod



Posted by Evelyn Doane on 7/8/2018

With rent prices shooting soaring across the country, many young Americans who were previously happy renting while they saved for a home are now turning to other options.

One common solution is a starter home. If you want to keep your monthly mortgage prices low while being able to build equity and slowly save for your ďforever home.Ē a starter home can be a great option for first-time buyers.

When does it make sense to buy a starter home?

Buying a home means mortgage payments, home maintenance and repairs, and closing costs. However, they can also be a great introduction to the responsibilities of homeownership.

Better yet, starter homes allow you to build equity that can be used toward the down payment of your next home, something that first-time buyers often struggle with. This could help you secure a lower interest rate and avoid costly private mortgage insurance (PMI).

Sounds great, right? But when shouldnít you buy a starter home?

It might not make sense to buy a starter home if you donít plan on living in it at least 3-4 years. You might find that the cost of renting is less than that of your mortgage payments and closing costs if you donít live in the home long enough to reap the rewards.

It also might not be a good idea if your family is going to outgrow a small home in the next few years for the same reasons mentioned above. That makes it all the more important to discuss your long term plans with your spouse before considering a home.

Things to look for in a starter home

1. Resale value

One of the most important aspects of your starter home should be the ability to resell it in the future. Now, there is an endless number of factors that go into the marketability of a home. Key factors include the condition of the home and keeping it well-maintained, as well as the location of the home. Buying a starter home in an area that will attract young professionals down the road is typically a good investment.

2. Small size = low price

It probably goes without saying, but finding a home with a low price, at the expense of square-footage, is most often a smart choice when it comes to starter homes.

Small homes are cheaper to buy, cheaper to heat, and cheaper to maintain. However, since housing prices are trending upward, youíll likely still see a positive return on your investment in ~5 years time when youíre hoping to buy again.

3. Reasonable home improvements

If you can spare the time, buying a starter home that needs some work can be an excellent investment. It can be more difficult later on when you have a large family to care for and less time to focus on making improvements.




Tags: first home   starter home  
Categories: starter home   first home  


Posted by Evelyn Doane on 3/12/2017

Investing in a starter home is a great way to become a first time homeowner. Although starter homes generally donít have as many amenities as more traditional homes,they give you the chance to learn whatís involved in owning a house. Youíll experience the house shopping as well as the closing and financing process firsthand without taking on too much debt.

Amenities you get with starter homes

With a starter home, youíll also understand the types of repairs that are needed to maintain a house. Rather than guessing at how much you need to budget for house repairs and general maintenance, youíll see those numbers firsthand. This gives you the knowledge to know if you truly are ready to take on a bigger house investment several years from now.

Amenities and features that generally are built into starter homes offer convenience. Modern starter homes are designed with open floor plans. Youíll have the option to choose hard wood or carpeted flooring. Vaulted ceilings can help your house appear larger. So too can kitchens that have long counters along one side of the kitchen.

Through homeowners associations, you can have someone else mow your lawn, shovel snow and cut away dead trees. You wonít have to clean the community pool or worry about calling to have your garbage removed. Fees that you pay your homeowners association will cover these services. Depending on where you buy your starter home, you may have to share a back yard with a neighbor.

Older homes as starter homes

Older homes that work well as starter homes are built with two to three bedrooms, an unattached garage, basement and a dining room. Bathrooms in these starter homes may be small. Additionally, older starter homes can yield costs savings upfront but require a larger maintenance investment.

Think about your personal needs and wants before you buy a starter home. Avoid buying a starter home because a lender tells you that a down payment is not needed. This step will get you a higher monthly mortgage. Approach buying a starter home similar to how you start out in secondary school before heading straight to college.

Look at the investment as a learning opportunity. You can get the skills to negotiate a great deal on an upscale house down the road. You can also learn what to look for in a neighborhood and community without signing a pricey mortgage.

As a new home buyer, it may make sense to begin with a starter home. If you fall in love with the house, you can invest in upgrades and renovations when your budget allows. Choose a starter home thatís centrally located and you could take shorten your commute to work or even take public transportation. Starter homes are also located near major shopping, business and entertainment hubs. Itís a reason why starter homes are a great way to transition from apartment living to home ownership.




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