Buy a Starter Home or Wait for My Dream Home?

Buy a Starter Home or Wait for My Dream Home?If you're looking to buy your first home in Garden Grove, you need to decide if you'll begin with a starter home or wait until you can afford the dream home. Deciding when you are ready to buy has a lot to do with what you're looking for, and we understand that our clients are often stuck wondering if now is the right time. 

You'll find an abundance of different perspectives on when is the time to buy your first home, and what to look for in that initial real estate transaction. Here's what we think you need to consider as you decide between buying a starter home now or waiting until you can afford the dream home. 

Build Equity as a Passive Savings Plan

Saving up for a big purchase is a smart general financial principle, and should guide your decision making process for most of things you will buy. Real estate should be put in a different category than most purchases, though, because it is a tangible an appreciating asset. With the exception of some rare market conditions, you can reasonably expect that your home will appreciate in value more quickly than you can save. 

In the meantime, the equity you are building acts as a savings plan. Equity is the difference between the value of your home and what you owe on it, and that only grows as property values increase. At the same time that your starter home is building equity, your dream home will grow in cost. The best way to save towards that home is to leverage a starter home toward that end. 

Real Estate expert Bill Gassett of Maximum Real Estate Exposure provided insightful advice based on his many years of experience as a top performing Realtor.

"One of the best long-term investments is real estate. It has been shown over and over again to beat many other options. Getting into the market and buying a starter home can be an excellent way to start building equity. That increase in capital can help fuel the purchase of an upgrade. Over the last decade I have seen more homeowners dramatically increase their net worth due to buying and holding real estate until they want to make an advancement.

Without having made a home purchase they would not have been in the position to buy their dream home. By skipping a starter home and waiting to purchase, you are essentially making a landlord rich. In many places renting can actually be more expensive than having a mortgage. It is certainly something to consider when trying to decide between buying now or waiting."

Financial Benefits of Homeownership

Remember that there are many benefits of owning a home that you get to take advantage of whether you're in a starter home or your dream home. 

Homeowners can benefit from tax deductions on mortgage interest, which can reduce taxable income and result in significant savings. These tax benefits can help offset the costs of homeownership, making a starter home even more affordable. In addition to mortgage interest, property taxes can also be deductible. These deductions provide further financial incentives to buy rather than rent while you save for a dream home.

Real estate prices often rise faster than the rate of inflation. If you delay your purchase, you may find that the price of your dream home has increased beyond your reach due to inflation and rising property values. Buying a starter home allows you to secure a foothold in the market at today’s prices, offsetting the impact of inflation. 

Don't forget that the equity you are building can also be leveraged to your advantage. You may have the opportunity to reach other financial goals thanks to refinancing or a home equity loan or line of credit. 

Getting to Know Your Community

Being a homeowner in the community you intend to invest in for your future dream home allows you to begin putting down roots now. Even if you can't yet afford the property you ultimately want, moving into a smaller or more affordable property in a similar location is worthwhile.

Owning a home in Garden Grove allows you to become part of the community, establishing roots and building relationships. This sense of belonging can enhance your quality of life and provide a support network, which can be particularly beneficial if you plan to stay in the area long-term.

Living in the community also gives you firsthand experience and insight into the local real estate market. This knowledge can be advantageous when it’s time to upgrade, as you’ll be more familiar with neighborhood dynamics, property values, and market trends.

Ready to learn more about buying your first home? We are ready to help you find homes for sale in Garden Grove that meet your unique needs. As the 2024 Service Provider of the Year in Garden Grove, we are a team of realtors ready to help, so contact us any time to get started.

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