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Owning a home is a dream for many, representing stability and success predicated on a foundation built through hard work. Once you’ve gathered together a downpayment and upped your credit rating, the big question rears its head: starter or permanent? It all depends on your situation. A starter home assumes that you will move again down the line, perhaps following your career trajectory or living in a different area. Conversely, a permanent home highlights the will to settle down, identifying where you plan to live indefinitely. Though the choice can be challenging, by breaking down the two approaches, you can better find your fit in the housing market.
Of course, homes all come down to a piece of infrastructure used to support a family unit. Essentially, a starter home is bought by first-time purchasers, with the idea of upgrading to something bigger and better down the line. Based on this principle, a starter home is something you plan to live in for a handful of years, while a permanent home will be your main residence for at least a decade.
While there is no hard and fast definition for these terms, some things are consistent across the board. Starter homes are less expensive than permanent homes, including the purchase price and the land taxes. Starter homes are also smaller than permanent homes, generally with fewer bedrooms and bathrooms. Often, starter homes are locations like townhouses, small bungalows, or condos. Conversely, permanent homes are detached, larger, and tout more square footage.
It helps to remember that, due to the mercurial nature of the housing market across Canada, a starter and permanent home won’t look the same nationwide. For instance, you can get a permanent home in rural New Brunswick for the same price as a starter home in Toronto. When making your decision, be sure to calibrate your expectations based on the location in which you’re looking.
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There are countless advantages to choosing a starter home, especially if you’re just starting a new chapter of your life and looking for something smaller or more affordable. Among the benefits are:
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Starter homes aren’t the right approach for everyone, and choosing this route comes with its own set of disadvantages. Among the drawbacks are:
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Assuming a starter home is your route of choice when pursuing housing, there are a few important things to keep in mind. By considering this decision from all angles, you will be better able to assess the merit of each individual home.
Yes, starter homes are more inexpensive than permanent homes, but they still cost a pretty penny. Set yourself a reasonable price threshold, typically done in conjunction with a mortgage pre-approval. This helps you ensure that, not only do you have the down payment, but that you also have the money necessary to make your mortgage payments for the whole period of the loan.
Especially when it comes to starter homes, the idea is that it is a stepping stone — and these are seldom perfect. Sure, there are some things that remain steadfast: get an inspection, check the roof and foundation, say no to mould, etc. However, there are some expectations you may need to calibrate in order to be successful. You may not find the right starter home in a perfect neighbourhood, it might lack a yard, or be missing that half-bath you wanted. If you are willing to be accommodating in these areas, then you are much more likely to get the long-term results you seek.
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Real estate professionals are not only trained and certified to work in the housing market, they are often experts in the local area. An invaluable resource when making long-term housing plans, your real estate agent holds a plethora of wisdom. Be sure to find an agent with whom you are comfortable, who is both well-reputed and experienced.
Your home becomes an integral part of your life, acting as a headquarters for your family. While the desire to settle down into a permanent home may seem tempting, starter homes pose a lot of opportunities. Requiring a fair bit of planning and prudence, it can save you money and help secure that dream home. Though it takes patience, taking your time to find the right home is important.
Consider what you want out of life in terms of one-year, five-year, ten-year, and twenty-year goals. Using those details, you can map out the path of least resistance to get you where you want to be. Once you’re equipped with your truth and have solidified your finances at present, consult with a realtor. By putting in the time and the work, you can achieve your housing goals.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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