Tips for helping your transition from a starter home to a dream home

Preparing to buy your first home is an exciting and expensive process. That’s why many first-time homeowners compromise on their first homes. They often don’t have the capital, credit history, or equity for their dream homes. So, they buy a smaller, more affordable home at the start of their homeowner journey.

These first homes are often called ‘starter homes.’ They are usually smaller, older, and lack some amenities and features you may dream of having. But a starter home doesn’t have to be your forever home. You can successfully transition from a starter home to your dream home with careful planning. But how? Here are some of our tips for making the transition.

• Be smart when you buy your starter home. Select a home within your budget that allows you to save comfortably. It’s also wise to consider purchasing a home in a desirable or mature area with excellent resale value. Even if you buy the oldest house on the block, if the property values in your neighborhood continue to rise, you could come out ahead when you sell down the road.
• Pay down your mortgage faster. Another option to help you finance your dream home is paying down your starter home’s mortgage faster with increased monthly or annual lump sum payments. This allows you to pay off the mortgage interest quicker and start building up the equity in your home. So even if you sell before you’ve paid off the mortgage, you’ll have less debt with the bank from your first home purchase.
• Be willing to wait. Buying your first home is an expensive process. It takes time to recoup the cost of your initial purchase and your closing costs. Not to mention all the other costs of being a first-time homeowner, like buying furniture, repairs, and home maintenance. A good rule of thumb in real estate is that it takes about five years to recoup the costs of buying a house. So, if you’re willing to wait that long or longer before selling to buy your dream home, you may come out ahead!
• Find the balance between repairs and upgrades. Many people who buy a more affordable home in the hopes of selling one day to finance their dream home think they need to do a lot of upgrades to the house to help it sell better in the future. While renovation and home maintenance can boost your future sale price, you must avoid excessive debt from home renovations or repairs. Otherwise, you may be unable to purchase your dream property in the future until you’ve paid off the debt you owe. Find the right balance for your home’s needs and your future goals.

Our final tip is to make your starter home your dream home. If you have the right tools, you might be surprised to learn that renovating your home may be cheaper and easier than selling your house to buy something new. With our help, you can refinance your mortgage with a one-time construction loan or a renovation loan to fund the necessary repairs and remodels to take your home from a starter to a dream home. If you think this option might be the route you want to take, talk to your PRMI loan advisor today, and let’s see how we can bring your dream home to life in your current property!