Starter home or Forever home?

Message edited 6/24/2011 11:28:55 AM.

Re: Starter home or Forever home?

it would depend on location for me.

if both are in good locations, then I'd go for the "starter" home.

You want to be able to live and enjoy the fruits of your labor.

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See I was the opposite we were looking at starter homes, undormered capes and realized we didn't like it...and we wouldnt be able to afford $100,000+ to dormer it out....Nice size dornered houses are more $ so we decided to wait for the fall after the baby is born to look for our forever home which is a nice colonial. At the same time we are saving to get our dream home.

I know a lot of people who had a starter home then moved to their forever home...you just don't know what the market will be like 5-7 yrs later.

Re: Starter home or Forever home?

we just bought our first home, and considered the same things as you.

We made sure our first place was big enough that it could be a forever home if it HAD to be. but we have all intention of moving and upgrading one day. If the house was not big enough for us to stay in forever, for whatever reason, we didn't consider it. I didn't want to have to count on us moving one day. with the economy the way it is these days, you never know if you can just pick up and move. so we made sure it covered everything we would need. (it might not be re-done the way we like it, but it had enough beds and baths in a good school district)

We also made sure to afford the house on just one salary so I could stay home with kids one day. If we have a baby soon, I might work part time at the beginning on the days DH is off, because my salary goes toward some of our other expenses, like my car. but we will see how it all works out. HTH

Re: Starter home or Forever home?

It depends on your jobs and how secure they are.
If you are secure, then I would buy the dream home now:

Reasons:
Interest rates are at their lowest
After fixing up the 1st home, the 2nd home is harder with kids around.
Prices will stay stable for the next 5 years, may decline a little.
and if you need to sell, you may be stuck, because you may not get back the cost of what you put in.

Rule of thumb:

Location is number 1. buy the ugliest house on the block

Size is number 2: Buy the biggest house you can afford eating pasta for a year. You will out grow a smaller house fast and extensions are expensive

Amenities is last: the easiest to replace with out involving the town. Windows, Kitchen. Bathrooms etc....


Good Luck,
Arthur

Re: Starter home or Forever home?

We bought a starter home that is capable of being a forever home (we think at least! ) So I guess it's in-between for us...a little of both...

Living off 1 salary is key for us - we don't "need" a huge house, yeah, it would be nice if we got something larger but then we wouldn't be able to do things (go out to eat or order in whenever we feel like it, vacation, take trips, buy things to spruce up the house), we'd porbably be struggling when we have kids finance wise and who would watch the kids if I had to work? and for what? bigger closets? some extra square feet? another bathroom? It's just not worth it to me or my DH.

I rather have a better quality of life and a smaller house. I don't think I have a small house now but we could have easily spent a little bit more and got a mansion down here in FL but we wanted to be practical - and we def have room to grow a family. If we wanted to move and the market was good it could be an option down the road but if we were "stuck" here, I am sure we could make it work.

We bought something on the idea that it had to be able to be forever (even if we end up cramped like sardines ) but it doesn't have to be...

Message edited 5/19/2010 1:10:10 PM.

Re: Starter home or Forever home?

DH bought the house as a starter home. But if need it be, it could be our forever home.

The rooms are "small". I have a Levitt ranch house. But it's "livable".

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I agree with others that say a starter that can be expanded. I would start with what is most important to you (PT or FT work after kids) and that should give you your answer!

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we started looking for our home as a forever home b/c we can always do things to spruce up the house and if needs be we can build up. if we ever come to more $$ we would use that to be able to live our lives a little easier than we do now. if we cam into A LOT more money we would get the bigger house, as long as we dont struggle. We do not want to live beyond our means!

Re: Starter home or Forever home?

Posted by Nik211

We bought a starter home that is capable of being a forever home (we think at least! ) So I guess it's in-between for us...a little of both...

Living off 1 salary is key for us - we don't "need" a huge house, yeah, it would be nice if we got something larger but then we wouldn't be able to do things (go out to eat or order in whenever we feel like it, vacation, take trips, buy things to spruce up the house), we'd porbably be struggling when we have kids finance wise and who would watch the kids if I had to work? and for what? bigger closets? some extra square feet? another bathroom? It's just not worth it to me or my DH.

I rather have a better quality of life and a smaller house. I don't think I have a small house now but we could have easily spent a little bit more and got a mansion down here in FL but we wanted to be practical - and we def have room to grow a family. If we wanted to move and the market was good it could be an option down the road but if we were "stuck" here, I am sure we could make it work.

We bought something on the idea that it had to be able to be forever (even if we end up cramped like sardines ) but it doesn't have to be...

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Re: Starter home or Forever home?

Our first house was a starter! We move in 2 years for a better location. Better meaning closer to family, jobs, bigger lot.

This house, I have no idea what it is yet. Some days I will say its my forever home (with some tweeking ) other days I say we shall move in another 5 years. We shall see.

My advice is to put yourself in a better financial position. I am glad that when we bought this house we were able to buy something that allows me NOT to work FT now that I have a child. When I bought it, I never thought about that! but now I am thankful for that.

I personally would go for the cape that could be forever or could be starter, at least then you have more options.

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Re: Starter home or Forever home?

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I'd go starter home, it's what we did and although sometimes we wish we had a bigger house, we know we did the right thing

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Maybe you can find something that could be a forever home that has an apartment with income, the money could supplement while you are home.
Otherwise I would keep looking till you find something big enough to be a forever home in an affordable price range.

Message edited 5/20/2010 11:24:06 AM.

Re: Starter home or Forever home?

We were the same way.....back and forth constantly. We ended up buying our forever home. It was not much more $ than the starters we were looking at b.c it needed some work. Very happy with our decision!

Re: Starter home or Forever home?

Rates are very low right now and the difference between the two homes might not be that bad.

I ask my borrowers; If you take all your expenses, old and new, could you take the one you love out to dinner on a Friday night with out being late on your Macy's Charge? If not or if you have to think about it for more than 25 seconds then do not jump into a bigger, more expensive home.

You want to be able to enjoy your first home(i will assume) and have some breathing room at the end of each month. Also keep in mind, you will most likely want a bigger home in a few years anyway.... is there room for that possibility if you get the alleged forever home now?

Take all of your expenses and add them up. Add in the Mortgage and the Taxes and Insurance.

Take that number and divide it by your monthly income.....

you should get a decimal... that number should be in the less than .5. The smaller the number the higher the loan you can afford.

Tom

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If I could do it again (and I made the starter home decision), it would have been to buy a better starter home than we did in a better area.

I think the undormered cape thing in a good neighborhood in a SD you can live with is ideal Worst case scenerio - you dormer and live there happily. For us we bought a 3 bdrm ranch and we are busting at the seems, the market as you know fell to sh*t and we have to move now into the "forever" home and yet will break even rather than make money off the house we are selling. To dormer it in this area would make the house worth a rediculous amount and I still wouldn't want my kids in high school here so I'd move and never get anything close to what I put into it. If I even redo my kitchen at this point, I'd be at a loss... I can't put another dime in w/o being over market value.

Just know too, and I only say this b/c I would have considered the forever home then had I known this (we got 5% on this one too so rates were good at that point too), it's not as easy to "upgrade" and move as we thought. Most banks want you selling your current home before they'll allow you to buy the new one in order to give you the new loan. We are in this dilemma now... if we sell w/o a new house we have no place to live, but if we don't sell we can't buy. We have an offer on a house, but our current house is holding it up and we have been warned that we can lose the offer. We have no choice though. It's so stressful. Basically, I can't go into contract on the new one until I'm in contract on the one I'm already in. I have 2 kids and 4 cats... who's going to take all of us in while we search for a home?

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Man That realtor must really need the extra money with the bigger sale. Glad he is not handling my transaction.

I would def go with the less expenssive home. Like somebody mentioned quality of life is important and if you cant take your Wife to dinner on a Friday Night whats the point.

Do you really need 1 or 2 extra empty bedrooms and a home where 3 and a half people can use the bathroom at the same time?

live life with out struggle. My wife and I are renting and saving for a bigger down payment. But soon enough we will buy.

Tim

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Re: Starter home or Forever home?

We bought a house on the low end of our price range in an excellent location. Because of issues the sellers were having, we got the house for much at least 25k less than it is actually worth. This house could easily be our forever house - 3 baths and 5 bedrooms, but we may move to a new build in a few years.

Re: Starter home or Forever home?

Tell me how I make extra money if you stay in a home longer. Average homeowners stay 7 years. I can get 4 commissions if you move twice. (You buy and Sell) May be I should keep my mouth closed and let you do what you want. Then I would make more money. But that is not me. I give you my true and honest opinion, and if you add up closing costs commissions, transfer taxes points, I can go on and on (12,000 to 15,000 wasted) each time you buy.
Plus commissions on a 300,000+ home. add it up. Is it worth those Friday nights out and taking a bag lunch for a couple of years.

Also, I said if you had STEADY income.
Some of you are putting down over 20%. That is great.

But this advise is not for the buyer who is looking at a 250,000 home, and then starts looking at a 500,000 home. You still have to be approved in todays mortgage market.

So, I will adjust my recommendation to say if you can get approved for the larger home and can afford it but you have to make some sacrifices, you will be better of in the with the larger one.

This is from my own experience.

Bought in 1986 levitt home. 124,000
Sold in 1993 for 138,000 with 75,000 worth of improvements.
Bought in Old Bethpage in 1993 and improved it much more. But paid taxes, transfer fees, points, commissions all twice.
If I would have bought originally like our friends did, they just paid off their mortgage. Wow, I would have bag my lunch for years.

Arthur

Re: Starter home or Forever home?

We found a forever home that we could do on one salary.

For us living simply and without too much debt is really important, we also wanted me to be home when we had a child. We spent a long time looking for the right house and eventually found one perfect for us, is it "only" 1800SF which is small by today's standards, but plenty of room for us. I grew up in a 2000SF home with 9 people, DH grew up in a 1600 SF home with 7 people; for us our home is plenty big enough for our family of four.

We are in a great neighborhood, in a great school district with a good sized lot and our 100 year old home really fits our personalities. I think we were very lucky to find this home, but we were also patient in our hunt.

In your case, if it were me, I would buy the starter home, maybe it will turn into your forever home, but more importantly it will give you the freedom to decide what you want to do work wise once you have children. To me that is the #1 most important factor.

Re: Starter home or Forever home?