A prospective first-time homebuyer typically faces many tough decisions. One being whether to buy a starter home now to live in for the next 3-5 years or to save up to buy a “forever” home. Everyone will have a different idea of what constitutes a starter home, and one family’s starter home may be another family’s forever home.
There can be several positives to buying a starter home now rather than waiting several years to buy a forever home. Investing in real estate benefits purchasers by building equity with each month’s mortgage payment, rather than spending it on rent each month. Ideally, a few years down the road, you can sell the house and use the equity toward the purchase of your next home.
How long should you live in a starter home before selling it? Many experts quote the “five-year rule,” which states you should stay in a home for at least five years before buying a new home to build up enough equity to make it worthwhile. Do your research and stay up to date on the market to gauge when the best time is to sell; it may work for your situation after just three years of living in your first home. Connecting with a Baldwin REALTOR® can give you the insight you need to make an informed decision about the right time to sell.
Here are a few other potential benefits of buying a starter home:
- Taking advantage of low interest rates
- Reselling when you’re ready
- Breaking into the housing market at a lower price point
- Saving on expenses (compared to more expensive homes)
Some factors to consider before taking the leap and purchasing a starter home are your budget, credit score, overall financial situation, the local real estate market, your current needs and your future plans. If you decide this is the right move for you, the next step is to find the right Baldwin REALTOR® to help find your starter home.