Do you buy a starter home now or save up until you can afford your ‘forever’ home?

A starter home is something you'd be happy living in for around five years even if you know you'll outgrown it. A forever home, on the other hand, is one that you could potentially see yourself living in for the rest of your life, or at least the next 20 or 30 years. This means it meets most, if not all, the criteria of your dream home: the right location, the right size, and all the extras.

What it comes down to is money and qualifying.

There are benefits to buying a starter home now rather than waiting for years to buy a forever home. First of all, interest rates are at historic lows. Yes, they may be low next year or the year after that, but then again, they may not be low. A good mortgage rate isn't everything, but your rate will impact your monthly payment and how much you'll pay in interest over the life of the loan.

Most of us won't live in just one or even two homes our entire lives, but a forever home is something that you can see yourself living in for 20 years or more. Perhaps it's big enough to accommodate a growing family and will be the kind of home that you envision making improvements to not just for resale value but to enjoy yourself over many years

Here's the problem: not many 30 somethings, let alone 20 somethings, can afford their forever home right now. As home prices and debt loans have risen, paychecks barely budged. In our grandparent’s day, one income bought a perfectly respectable home. Today, two professional incomes may not be enough to comfortably afford any home.

Waiting may also not be great because something that is not affordable now may be even less affordable later.

Though real estate is cyclical and will always have its ups and downs, in the long run, it may be harder to get that dream home of yours if you don't get your foot in the real estate door NOW

Blog provided by Chloe Colella