Starter vs. forever home, conservative price vs. all out (commission, mortgage, housing)

[emm74]

Originally Posted by marksmu

Do what is most comfortable and will leave you with some wiggle room. However from a real estate investment point of view, the better the school district, the better the resale....Homes tend to appreciate More rapidly in areas where the schools are solid...that tends to be the already gentrified and nice areas.

I always say buy the cheapest home in the nicest area you can afford.

Originally Posted by Silverfall

Well if I am reading your comments right, you can buy a $200,000 home at the high end of the middle income community or you can spend $200,000 at the low end of the upper class community. Buying the worst house in the best neighborhood is typically the best for resale.

These are the points that make the most sense to me. Look for something at the $200,000 price in the better neighborhood. You may have to compromise some on the house itself, but you'll be in the location you see yourself in longer term. That could still change, life has a funny way of doing that! But you'll still be better positioned for resale in the better location. And if you end up loving the location and want to stay there long-term, but there are issues with the house, staying on the mid point of your budget now will serve you well if you choose to invest some money into remodeling down the road.

[luzianne]

Here's my experience. We bought less house than we could afford. We just had an 18 month old at the time. We had two more kids. By the time we had more kids and needed more room, we realized that property values had risen so much that even a lateral move would now cost so much more than we had paid for our current house. So we stayed. In retrospect, it would have been better to buy the bigger, more expensive house to begin with, before the property values went up more.

On the other hand, we are now empty nesters and the small house is plenty of room for the two of us. And it's paid off. If we had bought the more expensive house we'd still be paying for it.

If I were doing it again, though, I'd buy the house I wanted to begin with in case I ended up not moving again.

[mkarch]

At that price differential I'd go with the more expensive home. Presumably it would also be easier to sell being in a better neighborhood. If the price difference was $200K vs $400K that would require a bit more consideration.

[EvilCookie]

Assuming you can afford it to where it won't make you paycheck-to-paycheck house poor, I would go with the better home. Think of it this way - you'll still have a mortgage to pay, so if something really disastrous happens financially, you would be in trouble anyway - but with the nicer home, it will be easier to 'move down' if need be - sell it or rent it out and move to a smaller place. With a starter home you're facing the risk of prices going up to where you may not be able to upgrade by the time you want to - and once you have kids approaching school age, that timing will matter a lot. Also, selling and buying and moving are expensive (not to mention a royal pain!) and that's something you would need to count into the price difference - to sell your starter home when you're ready you may need to do repairs or upgrades, you may not be able to time the sale with the home you'd like to buy being available, trying to sell and buy at the same time is very tough. And who knows what the market will be like at that time. So with that in mind, going for the more desirable house - or at least the desirable neighbourhood as people said, would be my recommendation.

PS. Always amazed at prices in some parts of the US - we just moved to WA where $250K would get you an apartment at best, and we think it's really cheap here compared to the Bay Area where $250K would get you probably a room. Crazy.

[crystalys]

Originally Posted by keraT

I am sure this question has been asked several times before,but I have to ask.

• Is it better to get starter home which will make small dent in your expense & buy a bigger home later in life when the price might be higher & god knows what your financial situation will be like?

• Or is it better to find a bigger house now which you can just barely afford & consider it a onetime investment for future and suck it up. No moving, no worry about house price going up or down, no need to sell old home…etc

Here is my situation:

I make 90K/year, 7yrs in the job, no loans, no kids, have anold car, have 2 family house fully paid rented out. ..etc.. So no financial struggle or loans. Ihelp my family out often but no mandatory obligation. I am newly married & my husband is oppositefrom me. Makes 30K/yr, has 16K in loan,current job is 2 yrs old only.

We are house hunting & there are 2 types of house we aredebating over:

• A starter/midlevel home that cost ~150K +/- 50K in mid-incomecommunity with average school district. I know in future we will need to move to better school district when wehave kids old enough for school.
• Forever home cost ~250K +/-50K house in upper-middle class community that has greatschool.

[font=Arial]Based on our combine income we can afford the higher endhouse right now. But I am worried whenkids come alone & our expensive goes up, will we be able to live in theexpensive house. What if I can't manage kids/work & choose to stay home, there is no way his income can managethe expensive house. But his income alone can manage the starter home. But if webuy a starter home now, in 10 years the 250K house will be 350K. Who knows what the future will be like &if we will even have money for down payment? Shouldn’t wetake the risk now while we are young & without child instead of leaving thebig investment for later?[/FONT]

I would hate to be chained to work due to mortgage & I am conservative by nature but sometimes I can be tooo conservative. I am not sure what the best move is

So here are my thoughts..... You make 120K a year combined and you both anticipate raises or new, higher paying job positions in the future, this is a normal expectation. As of right now you only need a starter home. You point out that the more expensive home may be more expensive in the future. So with that line of thinking, wouldn't the starter home also be worth more in the future? That would make the more expensive home comparatively more affordable when the time comes to start a family and you need/buy a bigger home. I would go with the starter home, sock away as much money as possible and hope that the economy improves and property values increase at a good rate.

[momtothree]

Interest rates are low right now, I would do something in the middle. Get the cheapest but nice house you can in the best school district. I wouldn't get a starter home, especially if you are planning on kids in the next 2 years. As babies, they take up the MOST space with all their stuff. So you actually will need that space now rather than later.

[veuvegirl]

I am on my second forever home. Our first home the 'starter home' I wish we had bought a bit more of a house. We ended up putting a ton of money to fix things, upgrade rooms etc. It would have been cheaper in the long run if we started off with a nicer home!

[CSD610]

What is the point of getting a "starter home"?
Why not just get the home you want that you will stay in, pay cash for it or pay it off in 15 years and own your home in a very short period of time?
Then you don't have to deal with looking for another home, paying a lot of money again, packing and moving.
Obviously life changes will make some moves necessary but they don't have to.

[MIEng]

Originally Posted by keraT

I am sure this question has been asked several times before,but I have to ask.

• Is it better to get starter home which will make small dent in your expense & buy a bigger home later in life when the price might be higher & god knows what your financial situation will be like?

• Or is it better to find a bigger house now which you can just barely afford & consider it a onetime investment for future and suck it up. No moving, no worry about house price going up or down, no need to sell old home…etc

Here is my situation:

I make 90K/year, 7yrs in the job, no loans, no kids, have anold car, have 2 family house fully paid rented out. ..etc.. So no financial struggle or loans. Ihelp my family out often but no mandatory obligation. I am newly married & my husband is oppositefrom me. Makes 30K/yr, has 16K in loan,current job is 2 yrs old only.



We are house hunting & there are 2 types of house we aredebating over:

• A starter/midlevel home that cost ~150K +/- 50K in mid-incomecommunity with average school district. I know in future we will need to move to better school district when wehave kids old enough for school.
• Forever home cost ~250K +/-50K house in upper-middle class community that has greatschool.

Based on our combine income we can afford the higher endhouse right now. But I am worried whenkids come alone & our expensive goes up, will we be able to live in theexpensive house. What if I can't manage kids/work & choose to stay home, there is no way his income can managethe expensive house. But his income alone can manage the starter home. But if webuy a starter home now, in 10 years the 250K house will be 350K. Who knows what the future will be like &if we will even have money for down payment? Shouldn’t wetake the risk now while we are young & without child instead of leaving thebig investment for later?

I would hate to be chained to work due to mortgage & I am conservative by nature but sometimes I can be tooo conservative. I am not sure what the best move is

What could be your ideal home now, might not be in 10 yrs. Also your financial situation might be different (hopefully for the better, but anything can happen).
Also once you have children your priorities might change.

What I would do?

Buy the starter home. By the time you have children and they are ready for school, how many years would that be? 6, 7, 10 ? A cheap starter home will allow you to save like crazy, considering you both will be hopefully, increasing your income with time. By the time you need a place in a great school system you will have a decent downpayment saved and you can add your started home to your portfolio of rentals.

Don't worry what the prices are going to be in 10 years, there is no point. What if there is another recession and prices go down again by the time you start looking again? Anything can happen in the future.

[FireFly2]

I would never buy a home that couldn't potentially be a forever home. I would buy something appropriate to start with. If you don't have enough savings to buy an appropriate home, then wait a year.