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We are hoping to buy our first home sometime in the next year. We would both be 23, planning to have children in the next 2-3 years and would have long term jobs in the city.
Mr. Boa and I have difference of opinion on whether to buy a starter home or a forever home. To me it makes no sense to buy a home we will outgrow soon and plan to sell in a couple of years(especially in this market), to Mr. Boa it make no sense to buy a more expensive 4+ bedroom house for just us 2.
What do you guys think?
I think it's always best to buy a home that suits you now AND later. Your first home doesn't have to be your forever home but it should suit you where you see yourself in at least 5 years.
I have to agree with SFreeman2187 buying house should be fitting your life now and down the road some. For example the house DH and I bought, could be considered a starter home but also a forever home. Honestly the only way I could see us moving is either due to different job situation which takes one or both of us out of the state or if we have more than 2 children.
I know in the future I would love to remodel our home but am happy with what we have now.
I voted Other and I'll explain why.
DH and I are house hunting for our first home now. We're hoping to find something with at least 2200 - 2600 sq. ft and 3-4 bedrooms. Although it is just the two of us (and our dog) for now, we plan to be in this home for at least the next 8 years or so and should have a couple of kids by that time. So we want to make sure we'll have room for our expanding family and our dog.
That said, once our kids start entering school years (~8 or 9 years from now based on our TTC timeline), we plan to move to a more suburban area with a much better school system within the same city.
So while our first home isn't a "forever" home, I also think it is much more than a starter home because we want to ensure we don't outgrow it within a couple of years.
Plan ahead. I know of too many people that decided to go with a starter home and then planned to move to a better neighborhood/bigger place only to get screwed by the market and get stuck.
Buy what you can afford, it is as simple as that. We can only afford a two bedroom apartment so that is what we bought, in 3 to 5 years would should be able to afford a 3 bedroom townhouse so we will move up then. If you can afford a big house then go for it but don't put yourself in money trouble.
I agree that it should be good for at least 5 years. We went the starter home route. Had we waited for the forever, we still wouldn't afford it (2.5 years later). We will probably have to move or add an extension in another 2.5 years (when we might think about baby number 2).
I should add that I am a Realtor in Texas. I always ask my clients what they plan their life to be like in 5 years. Then 10. And I work from there.
The thought of a "forever home" scares me. I like moving every five years or so.
That being said, my home is a teeny condo that we hope to rent out once we're ready to move onward to a bigger home.
When looking for our first home we had an eye towards a home we could see ourselves in for the next 5-7 years. That included the addition of a dog and at least one child. However with increased income and built equity in those 5-7 years we for sure intend to upgrade. I can't image living in one house forever.
Our situation is a little different. Were looking for a home to raise our kids then we want to get our dream home when they are older. The reasons are because I can't take my son out of the state unless I want to fight for full custody, and we want to move to the beach. It would be easier to raise babies here and then move to the beach when they are at least teenagers.
I vote forever home but our forever home can't happen right away and I don't want to be stuck renting for 10 more years.
I don't ever ever want to have to move more than twice... I was moved around so much as a kid (almost once a year!) it was terrible- I won't put my kids through it, I still don't have any close friends. =/
It depends. Can you afford your dream forever home now?
Even if you plan to start TTC in 2-3 years it could easily be 3-5 before your baby actually arrives...
Just remember how much moving sucks! If you can afford your "forever home" now, then why not get it? FI and I just bought our first home and we can easily see ourselves living there as our kids (that we don't yet have, haha) grow up. It has 3 bedrooms upstairs and an unfinished basement (and he's a contractor and can easily finish it to add whatever we decide on). More than what we need right now, but it should be just right in a few years. If it's not, we'll move, but I like to think we could stay there if we wanted to.
We got a house that isn't necessarily a fixer upper, but is nice enough that we didn't need to do major improvements which has been nice. It's also big enough to grow, could fit one maybe two kids in there. We plan to stay here for another five years or so, by that time, I'll be done with nursing school and making good money, and we will get the "big house" that we'll grow old in at that time.
I feel like "starter home" used to mean 5 years or so but with the economy it could easily be 10 or longer. You dont need to find your forever home but I would definitely suggest finding something that your going to want to be in for a good amount of time.
Thats how Im approaching the process.
I cant afford any type of house right now (weddings are expensive!) but by this time next year we should be able to afford a 3+ beddroom comfortably though not neccesarily our dream home.
Real estate is generally a long term purchase. Buying something with the idea that you might sell within 5 years is risky. In addition to possible market fluctuations, you will need to consider closing costs (lawyer, taxes, relator fees, etc. Those were way more than I thought they'd be!)
In addition, I think you will really need to think about the size of mortgage payment you will be able to handle, particularly if you will be taking time off work for having kids, etc. We positioned ourselves so that we could live simply on only my hubby's income, but be able to pay off the mortgage faster if we have a second income. Interest rates are low now, but they are bound to increase! Even if you get more of a starter place it will be some time before the kids really fill up the place anyway.
I am used to moving every few years, so forever home doesn't really exist in my mind. Living in a home for 5 years is about as far ahead as I would plan.
If you can afford to buy the forever home now I say do it. With the market we live in nowadays you don't want to be selling for a loss when you've outgrown your starter home and NEED to move.
I would say starter home because most people can't afford the forever home they want right away, but not a starter that you'll outgrow in 3 years. Maybe a home large enough for one or two young kids, but then as they grow or as you have more kids you might want to upgrade. On average, people move every 7 years. I personally lived in one house until I was 18 and went to college but I'm an only child so we didn't "outgrow"it. It depends what you want from your future.
I think it all depends on your budget. If you can swing it financially buy a house that would allow enough space for 2 children and you will be comfortable in for 5-7 years ! But to be honest, most people buy a starter home first and then work to 2nd/3rd or forever home. I will say that buying a second home is easier finacially as you already have equity in your 1st home and can actually afford to do alot of the things you want in your 2nd home. I also believe you learn what you really need/want in house with a starter home. Whatever you do leave enough cash left over from your bills, mortgage, entertainment to allow you buy furniture, decorate, landscape etc. I personally find furnishing/decorating a house most expensive part.
@cvbee: I have to agree completely but would like to add. When buying what you can afford do not trust what the bank tells you can afford. The banks usually say that a home costs can be 35-40% of your annual income. Which is true, however you need to also take in to account maintance, anything you are going to want to change (paint colors, carpeting, kitchen cabinets, whatever) general upkeep, and taxes in to that.
In reality the actual cost of your mortgage should not be more than 25-30% of your income... don't go over that no matter if the banks tell you that youare elidgible for a 300k house if 200k fits you then it fits you. There is no use running your self broke on a house payment when you are trying to have kids in the future, you are going to need the extra cash in other places.
just my opinion though
We wanted to buy a home with a mortgage we could afford to pay on one income. With the economy the way it is, and life just being unpredictable, we wanted some extra wiggle room. I just thought what if someone loses their job, has to go on disability, or wants to stay home with our (potential) future children. I didn't want to have a big beautiful home I couldn't enjoy because I was stressed out about money. That's why we went with a foreclosure we could rennovate. Our total house expenses, mortgage/taxes/insurance is less than we payed for rent. We used our extra cash to remodel, and now the home is really us. It's certainly not extravagent, but it's 3 bed, 2 bath, and if we HAD to, we could stay here forever. I hope one day we can build our own home, though. But I'm not ready to take that on until the economy improves, and we're more established.
We bought both. The plan is we'll be in this house for 5-10 years. But we purchased in a desireable area with just enough room to expand a little so if we got stuck we'd be happy with it being a forever home or if we sold we're already in an area everyone wants to buy into. We might not be able to spread out as much as we would ideally like in the future if it turns into a forever home, but we'd be fine. It would be snug but comfy.
Buy what you can afford. Period. Yeah. I would have loved to buy a 4 bedroom house on it's own lot with a backyard so when we start a family and pop out a couple kids we're already comfortable. But we can't afford that. It's as simple as that. So we settled for a 3 bedroom townhouse with a patio.
Now, if you can totally afford it, can buy into a good area that would be easy to sell in if you decided it was no longer a forever home, get a little extra space. Especially if that family is on the way.
the 5 year rule. Buy a home that you would be comfortable in within your 5 year plan. So, if you plan to have 2 kids in the next 5 years, plan for a house that you can be comfortable in that situation. Hope that helps!
Definitely plan ahead! We bought our house knowing it isn't our home until retirement, because we would love to build a bigger home on a bigger lot one day, but we could live in this house forever if we needed to. It seemed ludacris to a lot of people when we bought a 2200 sq ft house with 4 bedrooms and 3 baths, but we didn't want to "grow out" of the house and need to move if we weren't ready to build our dream home yet. I am really happy we made the decision we did, now that we have our 1st baby on the way, and we still have lots of room to grow into the house!
We bought our forever home. It's way too big for the two of us, but we bought in 2009 when the market had bottomed out where we live. It was a steal at the price we paid for it and we knew that no matter what, it would never go for less than what we purchased it for. If we decide to have a family, it will make a perfect home. If not, we'll probably downsize. I think if you can afford it, you might as well go for something you can grow into, especially if you have stable jobs like we do.
In this market, I can definitely see the positive side to buying your "forever home." I only say that if you're in a market that is currently down because you could get an amazing deal on a home. (I haven't read all the other responses, so I haven't seen if you've addressed this yet. Sorry!)
Just wanted to share my experience - FI and I bought a home we can see meeting our needs for at least the next 10 years. We plan on having children fairly soon, but we do not plan on having more than 2. We have a 3 bedroom house with 2.5 bathrooms, on a little more than half an acre. You see, we bought our house with the intention of kids, but we also bought a house on a level lot so we can add on if we decide we love our house more than we would want to sell it. Our Win-Win, I guess you could say.
We got an AMAZING price on our house, so we definitely have the budget to add-on/renovate as our family grows if we so decide. We also bought in a good school district (which may not matter, since I'll hopefully be working in the school system) and in a good, established neighborhood with swim/tennis/etc.
I can't imagine living in the same house forever, but I was also raised a military brat. FI on the other hand has lived in the same house for 25 yrs. People always say, "oh just upgrade and remodel." But, what about that very large percentage of people who never do it for whatever reason! Then you're stuck in that 1980's modeled home (which there's nothing wrong with albeit asethetics). Meh, I'd go with what you can afford now, as your tastes, lifestyle, and life situation will certainely not be the same in 20yrs. And just like stability-change is also good!
The real question is What is the difference in price?
Would buying a smaller house that allows for some growth save you enough money per month and in down payment that you could actively save for another downpayment?
Then you could sell the house if its profitable or break even, or rent if its not and still move up in size in 10 years.
The last thing you want to do is buy big only to put yourself in more debt you may not be able to afford if someone loses a job, or limits your cash flow to do things you want to do. Like stay at home, take vacations, save for retirement(!!!!)
Really, you should only buy what you can afford that allows you to sock away cash.If it stretches your budget, dont buy it.
I'm of the buy what you can afford but make sure it's going to work for you as well! I bought my house almost 3 years ago, and the market has tanked dramatically and I owe about $20k more on my house that what similar ones in the neighborhood are being sold for. That being said, this is also not a house that is conducive for hubby and I and our two dogs. We are now in the process of building our dream home and plan on turning the current home into an investment rental property. I wish that I would have rented for another year and then hubby and I could have bought a home together that we could have stayed in for a few more years and not have to balance two mortgages at one time.
I voted for starter home, but I think of a starter home as lasting more than a couple of years. Planning ahead is good, but what you want/need will change from the point you're at now and the point you'll be in after your children are born and growing. Personally, DH and I plan on buying something a little smaller and then looking for a new home 5-7 years later.
I voted other...
We bought our first home together which is considered a starter. We will stay here for 5-10 years, by the time we have a couple of kids we might look at buying a bigger house. But we plan on keeping this house, when we are empty nesters it is a perfectly sized house to downsize into plus it will be paid off by that time. It is a single story house with a great yard. Granted this plan may change but it likely will be a forever home in the long run.
I don't really know your situation - but honestly, if buying the 'forever' home is going to break the bank I would strongly suggest you opt out of shopping in the high end of your budget. Having your first home, even one with a low monthly mortgage payment, gets incredibly stressful after the initial 'woohoo!' period. Your bills seem to get higher and random things go wrong or you realize you have to fix or update things that cost hundreds, or even thousands, of dollars. Trust me, I'm a year into home ownership and I kind of miss living with my Mom, haha.
Why not buy a home you can see yourselves in for 5-10 years instead of just 'a couple'? We have a small-ish starter home that I adore, and we're starting to finish our basement for extra space (we're putting a closet, pantry, 2nd living room, bar, laundry, AND full bath down there - it's amazing the things you can do with 1000 sq. feet or less!) so that if we decide to have a baby soon we'll have plenty of room.
My advice would be 1) buy within your budget, and don't push it, 2) be sure it's a solid investment, but don't make that the primary deal-maker/breaker, 3) don't buy a 'dream' home because you don't know how your dream will look in 10 years (I mean, you're planning on having kids but what if you can't or only have one, would you still want a 5 bed house?
So basically I agree with a lot of what others have said, be practical to your current situation, but don't buy something that hardly fits you guys right now.
We bought our forever home in 2010. It was definitely too big for just 2 ppl but now with a little one on the way, it'll fit us just fine. There's a dedicated guestroom, which is perfect because all my family and friends live so far away and if by then, we're brave enough to try for another, we can convert the extra room into another bedroom.
It sounds like you're both pretty stable with no plans to move elsewhere. 2-3 years will come around fast and by then the real estate market might now be as favorable. If you can afford it, I say plan ahead.
Toughie! My spouse and I disagree on buying a 'forever' house when we move. One of us grew up in one house forever and one of us didn't.
Personal opinion - regardless, make sure you have an "exit" strategy or at least know the transaction costs associated with moving. We have decided to move and there are non trivial costs associated with selling. Our most likely destination has much higher realtor fees, property transfer taxes, etc, and we will be very conscious of that when we decide to buy again and plan some exit strategies.
Above all - buy what you can afford! My parents always based the mortgage on 1 income and it was a godsend when my dad became self employed and had crazy oscillations in his income.
Yet another strategy - buy the starter home, but treat the mortgage payment like it was for the bigger house. Put that amount of money as prepayment/doubled up/etc against the mortgage and you will know if you can afford or are comfortable with that lifestyle. Plus, you will pay a lot less in interest, therefore growing your equity a lot faster, so down the road you could go to buy your forever house and be able to put down A LOT more on it.
Then you have to deal with whether or not your real estate market is providing you pricing you'll never see again...
I think in this economy, you shouldn't buy a home unless you can see yourself there long-term. I honestly believe the days of the "starter home" as we knew it are over. So while I wouldn't rule out moving, I wouldn't buy a house you are sure you will grow out of it in the next few years, either.
I am so happy we bought a starter home. It's on the smaller side, but plenty big that we can grow into it. If something were to happen, we could live in the house forever, but we don't plan on it.
We have learned SOO much about what we want for our forever home. There are so many minor details that we never thought about when buying our first home. Now we have a clear picture of exactly what we want, in 7-10 years :)
I voted other because i think there's a middle ground.
I bought my house before I was even engaged to DF, but I kept in mind the possibility of us getting married, having kids, etc.
It's only two bedrooms, but it's large enough that we can make it work.
We had planned to buy a new house when we got married, but that's just not in the cards for us now. I'm thankful I chose to get a townhouse instead of a condo though because at least we won't be as cramped as we could have been.
And the payments are perfectly comfortable for me alone, so together we should be able to save up for the next step.
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