If you are looking for a house for the first time, you might be wondering whether you should purchase a starter home or a forever home. A starter home is a home in which you intend to live for a few years before you sell it and upgrade to a better home. A forever home is a home that you intend to be in for ten years or more. You can see yourself moving into the house and potentially spending your entire life there. How do you decide which type of home you should purchase?
A Starter Home
If your budget is relatively tight right now, you might be thinking about purchasing a starter home. A starter home is typically smaller than a forever home, which makes it more affordable. On the other hand, if you plan on having kids in the near future, you might want to purchase a larger home instead. Furthermore, you need to think about capital gains taxes when you sell your starter home. If you take the proceeds from your starter home and use them to purchase a larger house immediately, you might be able to avoid capital gains taxes.
A Forever Home
If you could see yourself spending the rest of your life in a certain place, you may want to consider buying a forever home. This is particularly helpful if you can secure a low-interest rate, as the interest rate might not change during the life of the mortgage. Interest rates could go up in the future, so you may want to lock in a low-interest rate for your forever home now. You will also need to think about your future cash flow to ensure you have the money to cover a larger mortgage. Do not forget to think about real estate taxes and home insurance as well.
Find The Right Home For Your Needs
These are a few key factors you should think about if you are looking for your first home. There are starter homes and forever homes available, but you need to think about which option is best for your needs.