Dream Home Or Starter Home And What I Could Save

Dated: December 10 2019

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Many First-Time Homebuyers today start to look for a Dream home instead of a Starter home. Home prices are on the rise and the inventory of affordable homes is dwindling. My advice to first time home buyers is to look for an affordable home that will build equity over the next few years. Live in the home for a least 5 years and you could potentially save yourself more than $30k which you could use toward a down payment on your Dream Home. Find a home that fits your budget and your needs. The tip is to start shopping with clear expectations of what you need vs what you want. You'll likely be compromising on some things. It might be nice to have hardwood floors and stainless steel appliances but are they a necessity? Don't feel like you have to compromise on everything, as it's important not to compromise on the overall quality of the home and neighborhood. 

It's important to have certain things on your must-have list such as:

  • Enough bedrooms and bathrooms

  • Structural sound of the home

  • neighborhood

  • commute to work

  • schools if you have children

Don't forget your Budget! Get pre-qualified before venturing out to look at homes. You have to know your budget before you start looking. Don't fall into the trap of falling in love with a home only to find you cannot afford it. 

If your compromising on your first home, remember you can likely work your way up to a bigger, better place in the near future. 

Understand that by buying something small today, you can sell and utilize the equity. Or, you can keep the home as a rental and make more income to qualify for higher loan amounts. 

Statistically, home values increase about 3% a year so if you purchase a home today for $250K and in five years you go to sell, likely you will have at least $40K in equity. Of course, this is different in every area and also if you do any upgrades to the home. Some see significant returns in less than 5 years while others will take at least 5 years. The moral of the story is to be patient, and not too picky on your first home.  It may not be your dream home but it may potentially turn into your Dream investment. 

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Jennifer Burns

Jennifer was born and raised in Maryland and for the last 21 years has resided in Middletown, MD. Upon finishing her studies at the University of Maryland University College with a Bachelors degree in....

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