We all have big dreams of buying a beautiful home with enough space and bedrooms to accommodate everyone with room to spare. A white picket fence wouldn't hurt either. However, sometimes you have to take baby steps in order to work your way up to your dream home.
According to a recent study by the National Association of Realtors, the number of first time home buyers is actually declining. The study also showed that, "Among 23 percent of first time buyers who said saving for a down payment was difficult, more than half (57 percent) said student loans delayed saving."
What this research shows is this is a unique time for homebuyers economically. The amount of student loan debt has risen to such astronomical levels that young people have higher monthly payments that prevent them from saving large down payments. Additionally, after the 2008/2009 housing crisis, there are stricter requirements for homebuyers.
Another issue is that too many people want large, spacious homes right away. They're looking for their dream home even though they're still working on their dream career. The truth is, you should buy a starter home for your family instead of your dream home.
Here are some reasons why a starter home might be best for you right now:
The Lower Cost Means You Can Own a Home Sooner
Buying a smaller, starter home means you will get a small starter home mortgage. The more affordable your home is, the less you will have to pay in a down payment and closing costs. So, if you're a young couple who doesn't make excessive salaries, this is a great way to get your foot in the door to home ownership so you can build equity in order to save for a much better second home.
You Can Grow as Your Family Grows
Many people buy homes for their future families instead of the one they currently have. A young couple might buy a house big enough for several kids when they are only pregnant with their first. Remember, people buy and sell homes every day. You can always upgrade when the time comes, but life is unpredictable so it's best to get a home that suits your needs today, not one that suits your potential needs in the future.
You Can Learn the Challenges of Home Ownership on a Smaller Scale
The great thing about beginning with a starter home mortgage is that you can learn about home ownership on a smaller scale. If you buy a large home as your first home, you might be overwhelmed with the amount of upkeep that a large home or a large yard requires. If you buy more house than you can afford, the repairs can break the bank. Starting with a smaller home helps you to learn about the responsibility of home ownership without becoming broke.
Other Tips When Shopping for a Starter Home
If you're looking for a starter home, some other tips are to look for a realtor who has your best interests in mind. Don't work with a realtor who will show you homes over your budget or who isn't respectful of your wishes. Another tip is to choose location over size. You can always adjust and add to a home, but you can't move locations. If you're looking for your first home, it's also a good idea to do a credit check and fix any financial issues you may have so that you can get the best starter home mortgage possible with an excellent interest rate.
Ultimately, a starter home is a great way to get your feet wet in the world of home ownership. If you do your homework, shop wisely, and choose a home you can afford, you just might love your starter home so much that you'll have a hard time leaving it for a bigger, dreamier home one day.