According to CNBC, average Americans now have over $155,000 in household debt. Costs of basics such as meat, milk, and toiletries are rising, while concerns about inflation take center stage in many political discussions. How should this factor into a young person choosing his or her first home in El Paso, TX?
If you have decided to buy rather than rent your residence, you may be thinking about purchasing a starter home. There are many good reasons to choose a smaller, less expensive home the first time you buy, but there are also a few situations in which you should consider purchasing a long-term, or "forever" home initially.
How Does a Starter Home Differ From a Forever Home?
A starter home is a smaller house, condominium, or townhome that is intended to serve as your first home. You intend to move on from this home after a few years, and you may wish to save money, get married, or have a baby while you live at this residence. Starter homes are typically smaller than forever homes and not as expensive.
The Pros of Buying a Starter Home
A starter home is a great option for a young person purchasing his or her first home in a town where he or she does not intend to stay long-term. Consider a young married couple who do not yet have kids or a medical resident who attends school for four years in another city but will likely have to move away to complete further training. Starter homes can provide stability, assist you in building equity, and serve as a crash course in homeownership before you choose a forever home. A smaller condo or home may not be difficult to maintain, and if you live in a college town or one with an active military population, you may be able to easily rent it out in the future.
The Cons of Buying a Starter Home
A starter home may not serve you or your family if you already have children who need their own space, you intend on staying in the area for a long time, and you already have a stable job and income level. Starter homes are more difficult to resell, and if you know you like your area, you may wish to skip the starter home and purchase a forever home.
Forever homes do not come without drawbacks. They are typically larger and more difficult to maintain, cost more money, and may come with a neighborhood homeowner's association fee; however, they allow you the ability to put down roots and grow your family as you see fit.
When you are deciding between a starter home and a forever home, make your own pros and cons list and be sure to include how much you can afford in your target area. El Paso homes have a median price of just over $200K at present. Use a mortgage calculator to better determine your budget.
Remain aware of the fact that your needs can and will change over time. A starter home may serve you well for a few years until you get a new job, have a baby, or wish to move closer to family in another area of the country. On the other hand, choosing to "settle down" in a forever home may bring you immense peace of mind and happiness. Keep your mind and your options open, and simply choose what is right for you at this time in your life!
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