Young couples often have a few major goals for their early career years. Starting their retirement savings, getting life insurance to protect each other financially, and buying a starter home. The first two are easy enough through a 401(k), Roth IRA, and insurance options like term life insurance. The third may be trickier.
A starter home is usually an affordable, smaller home that delivers on the essentials. Starter homes can be single-family homes but also townhouses or condos – usually it’s whatever meets the aspiring buyer’s immediate needs and suits their budget. Buyers usually know that their starter home won’t be where they live forever, but it may be a good investment or a way to take advantage of low interest rates or home prices. There are plenty of factors to consider while buying a starter home, but aspiring homeowners may want to start with these:
One of the most important factors to consider when buying a starter home is location. Buyers may want to choose a location that is close to schools, or other amenities such as grocery stores, shopping centers or local parks. These factors can help attract a buyer or renter later on. When buying a starter home, many buyers opt for a lower-priced home in a desirable neighborhood or even choose a fixer-upper if they don’t mind making repairs – both options can keep the mortgage low.
Affordability can make a starter home attractive to an aspiring homeowner. But home price is only one of many considerations when it comes to monthly costs – homeowners will also need to consider property taxes, closing costs, any renovation or repair costs, insurance, and HOA fees (if applicable). Some homeowners deliberately opt for a mortgage that’s less than the maximum loan they’re approved for, as this can keep monthly payments affordable and leaves room in their budget for repairs maintenance.
Some buyers deliberately seek out fixer-uppers that cost less but need significant repairs while others prefer homes that are ready for move-in. Which option a buyer chooses comes down to what they’re comfortable taking on and their budget. Many buyers will spend time figuring out the cost of repairs to decide whether they’re actually saving money with a fixer-upper.
Either way, new homeowners can benefit from budgeting for potential repairs, since new issues can come up and normal wear and tear happens over time.
Practicality goes a long way while shopping for a starter home. It’s important to remember that a starter home is not a forever home. It should absolutely be comfortable and spacious enough for the family, but it doesn’t necessarily need all the bells and whistles that a forever home will ultimately have. Buyers looking for a starter home can benefit from looking at the big picture, focusing on functionality, location, and price. They understand that there will be time to look for upgrades when it’s time to shop for their forever home.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.
Source: Northwestern Mutual