How a Starter Home Can Help Secure Your Future
Why Buying Your Dream Home too Soon Could Become a Nightmare
Our culture today is very centered around “instant gratification”. And why not? We can download movies still in theatres, order same day shipping on Amazon, and microwave a whole lasagna should we get the urge.
There are some things, though, where time and patience are the proven best ways to ensure happiness with your long-term results.
But no where does the effect of instant gratification result in a more prolonged and far reaching sense of buyer’s remorse than that of a too-large mortgage.
“Too large” can be different for a variety of people, but let’s look at some of what you should think about as you decide on the kind of home and, therefore, mortgage you’re willing to take on for the next 30 years.
Have Money Left Over
One very important and undervalued idea is to have money left over at the end of each month once bills have been paid and necessities purchased and even a little fun is had.
If the mortgage you are considering will more than likely max you out each month, I would say that it is too expensive.
“But,” you might say, “I’ll be getting a raise soon.”
Mama always told me to never count my chickens before they hatch. And I would say this is more crucial in the area of a home with a long term, large monthly payment than in most other areas of your financial life.
Buy what you can afford (ideally, less than you can afford) with the money you make now and not with what you think you’ll make in two, three, or five years.
Starter Home – Buy Less Than You Can Afford
Even more unpopular than spending less, is buying a home that isn’t necessarily your dream home to get you and your family started.
A starter home is a home that is more than affordable in your current circumstances and can be a huge advantage in getting you into that dream home, with its number one advantage being that it is an investment.
Unlike with renting, which is money you will never see again, buying a starter home is money that you should see again through either renting out that home when you upgrade, or building equity through appreciation over 5-10 years.
Your Starter Homes is Respectable, Not Embarrassing
Oddly enough, we all understand that responsibly saving our money and living below our means is ideal, but we may instinctively feel that our prestige is more important than security, and therefore get in over our head with the biggest, best house right off the bat.
But, as we discuss in this podcast, the home you dreamed of and longed for, can quickly become your prison.
The responsibility of an expensive mortgage can cause a lot of stress and frustration when you are allocating the majority of your funds for the place you live and have nothing left for weekend getaways, restaurant splurges, or maybe even just the money required for regular home maintenance.
Sure, your house is nice, but what about your life?
In addition to feeling stuck by your set bills, you may also feel trapped into a job you don’t love anymore. Without extra money to set aside to cushion a career move, that may or may not offer a lower salary, that trapped feeling can escalate.
Easing into home ownership with the idea of starting small and upgrading as savings and experience allow may not be the most romantic thought, but the logic of it can’t be denied.
Learn Where and How You Want to Live
Before jumping in a buying what you think is your dream home, it can be very useful to learn your preferences and tastes through renting or in a modest starter home.
Buying a big, beautiful, expensive home, you might find out you actually didn’t need all that space in the kitchen and would’ve preferred another family room. Or, maybe, you discover you do use the kitchen and want to prioritize that space in your next home. Another benefit to starting off small is finding out what kind of proximity is important to you. Do you actually like living in the country? Do you miss living closer to family? Do you wish you were closer to work or your kid’s schools? Just how important is a grocery store, park, coffee shop, hardware store, etc. to your life?
Making a smaller investment and lower risk commitment for your first go around means discovering what matters most both in your house and around your house. Because it’s very easy to believe you will enjoy life one way or the other until you actually find yourself there rethinking everything.
The Bottom Line
This is your life and you get to live it as you see fit. With a passion for affordable housing and security in the future of others, I just couldn’t help but add my two cents to the conversation.
The bottom line? If you want to buy the biggest and best house you can get, by all means, do it.
But, do give thought to some of the ideas here and make sure the house will make up for the other things you might have to give up once you have it.
And do some monthly mortgage comparisons, factoring in property taxes (as well as the projected increases) to ensure you will find that property affordable year after year in the near future.
Feel free to shoot us any of your housing questions, we’d love to answer them for you.
Until next time!