I love receiving questions from people seeking real estate advice. Below is a question I received via Facebook last week. Please contact me if you'd like your question answered as well.
Wondering if I could pick
your brain. How long do you usually recommend that first time homeowners own
their "starter home" before upgrading??? And also how do you advise
them on upgrading in terms of what they can afford???
Regarding keeping
your "starter home"... Honestly it comes down to your needs. Have you
outgrown it? Do you need more space? Is the space not functioning for you in
anymore? Perhaps you want to upgrade and take advantage of the lower interest
rates and home prices. There really is no set time for upgrading it all comes
down to life changes. I'm finding I have young clients who want to upgrade
their homes to take advantage of the lower prices and rates but they don't have
enough equity to do so. Many of them are keeping their condos or starter homes
and renting them out. That could also be an option for you. I have one couple
that wants to get out of their 1 BR condo to start a family and have a yard for
their dog. So you can see it's all about lifestyle changes.
Regarding upgrading
and affordability... yes be sure you go over the numbers over and over with
your mortgage broker. I recommend my clients download the mortgage calculator
app for their smart phone so as they go through homes they will know how much
the house will cost them monthly. I have a DROID and use Karl's Mortgage
Calculator which is awesome. The only thing it doesn't do is calculate PMI so
you would need to just verify the final numbers with your lender but it will
give you a ball park figure.
Also consider the
extra utility cost of upgrading your home (heat, electricity, taxes, water
bill, sewer bill, etc). I tell my clients for general maintenance of a home
consider about 1-2% of the homes price every year in repairs. Some years will
cost more than others but it gives you a ballpark of what to expect for
updating, broken items, etc.
If you can afford to
do a 15 year loan, now is the time to do it. The rates are so ridiculous.. in
the 2s! You will build equity twice as fast and have a fabulous rate. Again, if
you can afford to do it go for it.
