Starter vs. forever: Weigh future factors to make the best home choice
A transitioning workforce and economic uncertainty often force people to relocate in pursuit of better opportunities. Each housing hunt involves dozens of decisions that have to be carefully weighed by prospective first-time homebuyers, and one of the most basic (but often overlooked) is deciding whether to live in the home for a few years or several decades. Nobody can see into the future with perfect accuracy, but figuring out short-term versus long-term intentions is vital for buyers hoping to get the best home for their buck, and can have a trickle-down effect on the entire process, from size to structure to neighbourhood.
Starter homes are typically smaller and cheaper, with fewer bedrooms, requiring a smaller down payment. Forever homes are often larger and more expensive, offering additional bedrooms, allowing young families to fill the space eventually, rather than having to upgrade to a larger home down the road. Financial considerations are important, although each situation is different, and the decision can depend on more than simply dollars and cents.
GauGe the winds of chanGe
Gone are the days when people expected to settle into their homes and careers for 35 to 50 years. Career shifts have become the norm. The ever-shifting winds of change can help prevent first-time homebuyers from committing to more house than they currently need, since their employment situation and housing needs could look radically different in just a few years’ time. People who enjoy job security and want to put down firm roots might opt for a forever home.
For some, it simply comes down to priorities, and if those include long-term community bonds with long-standing neighbours, then the housing search can include neighbourhood desirability and school preferences. Those factors won’t matter as much to people who don’t have a desire to remain in the home for decades to come.
PRofitaBle veRsus PeRsonal
Some first-time homebuyers enter the market looking to turn a profit, and a starter home can be an attractive investment opportunity. Some starter homes evolve into income properties once first-time homebuyers become second-time homebuyers. Rather than selling the home, turning it into a rental property can provide an additional source of income for those who are willing to manage the property and keep up with the maintenance costs.
Intrepid investors can choose to renovate their starter home and attempt to flip it for more than their initial purchase price. These renovations often lack personal touches or preferences in favour of neutral colours based on current trends (like grey, for instance — a sizable amount of grey, in some cases). Exactly how much more a renovated home can sell for depends on factors such as location, size, extent of the work done, and the current real estate market, and each one should be weighed by firsttime buyers before deciding which home to purchase.
Those aiming to live in their home for decades don’t place the same priority on profitability. Owners of forever homes view them as long-term investments, serving as places for children to grow up, eventually leave, and occasionally return to. Renovations might occur over time but they’re often geared toward personal preferences, increasing comfort, boosting owner satisfaction, and helping establish a sense of home.
Regardless of whether first-time buyers opt for a starter home or forever home, the hard work begins after the house has been purchased, adjusting to mortgage payments, operating costs and ongoing maintenance. However, keeping these tips in mind can help owners get the most out of their home, regardless of how long they choose to live there.
BudGet PRoPeRly to avoid issues
Home ownership includes a number of hidden costs, including property taxes and insurance, as well as maintenance and repair costs. Additional costs can include home security systems, snow removal or gardening. Budgeting accordingly and identifying the costs associated with a home can help reduce stress and prevent surprises.
Sticking to a budget can provide peace of mind that money can’t buy. Part of that involves avoiding costly home renovations or upgrades until owners are on solid financial ground. Adding a Jacuzzi to the master bathroom or backyard deck might be appealing, but overextending and bursting a budget can cause headaches down the road.
Make MoRtGaGe PayMents PRoMPtly
Whether deciding to make mortgage payments weekly, bi-weekly or monthly, paying on time will help avoid delinquency, which can have adverse long-term effects. Delinquency could result in late charges or negatively affect credit ratings, and failing to make payments can result in serious consequences such as foreclosure.
Setting up automatic deductions from a bank account is the best way to prevent late or missed payments. Finance experts also recommend keeping at least three months’ worth of mortgage payments in savings for emergency situations. Discussing financial issues with a lender or a financial professional can help remedy the problem before it spirals out of control.
set Money aside foR eMeRGencies
Repairs are a costly side effect of home ownership. As homes age, major repairs or replacements to the siding, windows or rooftops are an unfortunate reality. Rely on the experts to help identify problem areas in a house. Knowing about repairs or replacements in advance can help owners prepare for them and budget appropriately.
Many home repairs, however, are unexpected, and the costs associated with them can put a sizeable dent in your pocketbook. Establish an emergency fund to deal with unexpected issues, ranging from home or car repairs to illness and job loss. Setting aside five per cent of monthly earnings in a special account can come in handy when problems arise.
conduct ReGulaR hoMe Maintenance
Maintenance and renovations are just part of the homeowner package. Learn about basic components and operating systems (heat, water, electricity, etc.) and identify actions to adjust them or to shut them off in an emergency. As the old saying goes, “an ounce of prevention is worth a pound of cure,” and failure to keep up with maintenance can have serious ramifications.
Conduct home inspections regularly, and replace or repair items that are worn out. Maintenance can range from simple tasks (replacing smoke detector batteries, cleaning out gutters, lubricating door hinges) to major projects (replacing water heater, patching up an aging roof, chimney cleaning) so wise homeowners always keep home maintenance in mind.