Starter Homes: Pros and Cons

Earlier generations often bought start homes initially and then would move into larger homes are their families and income grew. Now, coming up with a large down payment is a struggle for many. This results in renting and saving up for a down payment for a few years. There is also the option of buying a starter home and staying in it for longer than previous generations and paying down more of the mortgage. In order to help first-time home buyers, guide through these tricky decisions, we are going to look at pros and cons of a starter home.

Build stability quicker

When you buy a home in a certain area, many homebuyers can’t believe how much stability and roots they feel in a community. You are able to make any changes you want in order for it to feel more like your home. Overall home buyers feel a much great sense of stability.

Moving

It is no question that moving is not a fun task. Buying a starter home then upgrading in a few years will requires moving twice in a short time span. For some, it might be more cost-effective to save more and buy a bigger home instead of moving twice within a shorter time period.

Build Equity Sooner

If you can commit five to seven years to a home, there is a good chance you will come out on top in regards to building equity. If you make improvements that add value, you can take the equity you’ve built and apply it as a down payment on the next home. In essence, the start home might help you purchase your dream home.

Budget

In addition to mortgage payments and property tax, there are extra costs such as furniture, landscape improvements and buying items specific to that certain home. More than likely you will repaint a couple rooms and change the flooring at some point. These costs can add up so having to do that twice within a short time span could lead to a large amount of expenses.

Tax Benefits

When your first tax seasons rolls around as a home owner you will definitely see the benefits then. When you own a home, the interest portion of your monthly mortgage payment can be written off, dollar for dollar against your income. If you spend $1,000 per month on mortgage interest, at the end of the year you can deduct $12,000 off your taxes. The sooner you own, in theory, the fast you can save money towards your next home.

Ultimately, the decision is yours. Here at First Ohio Home Finance, we want to benefit our customers the best way possible, that is why we weighed in on pros and cons of a starter home. Do whatever you believe will benefit your current situation the most. If you are interested in buying a starter home or a long term home, contact us today!