The concept of a starter home is an American tradition that has existed for decades. Buying a starter home makes it possible to achieve homeownership, financial independence, and to build equity and credit while you transition to a larger home.
However, your first home doesn’t need to be a tiny, one-bedroom house with none of the amenities that you want.
In today’s post, we’re going to look at some of the things that are desirable in a first home or starter home, so that you can make the best financial decision now that will help you save more in the long run.
Top things to look for in your first home
1. Resale value
Perhaps the most important thing to think about when buying your first home is the day that you eventually decide to sell it and upgrade. There’s a lot that goes into the purchase value of a home. But, if you maintain the home or even make some upgrades, there’s a good chance you’ll be able to sell it for more than you paid.
Other factors that affect resale value are the location and real estate market trends. While you may not be able to change the economy, you can choose to buy a home that is in a location others will find desirable in the coming years.
The cost of your first home will be determined by its location, as mentioned before, but another huge factor will be the size or square-footage of the home and yard.
If you don’t plan on having children in the next few years and don’t currently have kids at home, having several bedrooms and a large backyard probably aren’t huge priorities. This means you’ll be able to save by buying a small home on a small property.
Similarly, if it’s just you and a significant other living in the home, you may be comfortable with just one bathroom for the next few years. These omissions can save you a ton of money on your first starter home.
3. Transportation and proximity
Typically, when people buy their first home they are just getting settled into their career and may still change jobs a few times. Most workers in today’s economy change jobs between 10 and 15 times throughout their career and do so more often toward the beginning.
This means it will make sense for you to buy your first home within commuting distances to companies in your industry.
4. DIY and fixer-uppers
Homes that are in need of repairs or renovations can be a great way to save money and see a return on your investment when you decide to sell. Of course, there are limits to how many repairs are reasonable while still getting your money’s worth from a home.
You’ll know from your home inspection or by doing a walk-through with professional contractors how much work is required to bring the home up to standards. Use those resources to ensure that you’re making a sound financial decision for your first home.
Newlywed life is such an exciting time! It’s also a time many couples decide to buy their first home together. And therefore aside from having a wedding, it’s the first major financial decision couples make together. Hit the ground running together with these tips:
Co-managing money: If they haven’t already combined finances before the big day many couples choose to do so after marriage. Learning how to manage money on your own is a task unto itself but managing it together is a vital skill for newlyweds. You can avoid unnecessary fights over money down the road by getting on the same page financially now. Get really honest with each other. Put everything on the table, especially various debts you each may hold, from credit cards to school loans it’s all important to get a true snapshot of your combined finances.
Create a budget for your life together. Calculate your combined expenses. Consider where you can cut back on services and habits to save money and what you need to add to your budget. Be sure to consider: savings for a nest egg, vacations, car repairs, and unexpected medical emergencies. You may also want to begin saving up to start a family or plan for retirement. When you have a complete picture of your finances you can then look at what’s left over. What kind of down payment and/or monthly payments will you be able to realistically make with this amount?
You’ll also want to talk to each other about your lifestyle goals. If you’ve always dreamed of living in the city or a small tightly-knit town. Perhaps you’ve always imagined a large, spacious home while your partner is thinking of something smaller to focus more on traveling. Do you want a garage, a big yard, a pool or to be close to family? Getting clear on what you each expect from your ideal home will help you find the perfect middle ground where you will both be happy.
It’s best to be able to make at least 20% of the house cost for a down payment. The higher the down payment you can make the better as you’ll have lower monthly payments and won’t get hit with extra fees from your insurance. If you can’t save up this amount, look into first-time buyer loans which allow new buyers to make a smaller down payment.
Be prepared. Remember to plan and budget for closing costs on your home. You don’t want this price tag to catch you off guard. Other things to be financially prepared for throughout the year are property taxes, homeowner’s insurance as well as maintenance and upkeep.
Being newlyweds is an exciting time where you have the rest of your life together to look forward to. And buying a new home, in a lot of ways, can feel like the first major step in laying down the foundation for a long, happy life together.