Barbara Corcoran Thinks First-Time Home Buyers Should 'Get in the Game.' Here's How
- Many new buyers are having a tough time affording a home today.
- Given the state of the market, the best bet may be to simply start somewhere -- even if it's not your dream home.
It's a tough housing market. Here's what first-time buyers can do to break in.
To say that today's housing market is a tough one would be an understatement. These days, home buyers are grappling with not just limited inventory and sky-high prices, but also rising mortgage rates. And now that the Federal Reserve has raised interest rates substantially for the second month in a row, borrowing for a home could get even costlier.
If you're a first-time home buyer, you may be extremely frustrated at your lack of options within the current housing market. But Shark Tank's Barbara Corcoran says first-time buyers should be willing to be flexible when it comes to a home purchase.
Get in the game
In a recent interview with Yahoo Finance, Corcoran insisted that the best thing first-time home buyers can do right now is "get in the game." Specifically, she said, "Get in with whatever house you can possibly buy…and trade up."
It's advice worth considering. The reality is that many buyers are struggling today because homes are expensive and options are limited, and as such, they're having a hard time finding their dream home. But you don't need to make the first house you buy your dream home. Instead, you can do what people have done for years and settle for a starter home.
There are actually a number of benefits to purchasing a starter home. For one thing, you might pay a lot less and end up with a more manageable mortgage. Secondly, if you're new to homeownership, you may find the idea of having to maintain a property overwhelming. Starter homes tend to be on the smaller side, which means you may get to spend less money -- and do less work for upkeep.
Just as importantly, in today's overpriced market, a starter home could be your ticket to breaking the cycle of paying rent. Once you start to build equity in your starter home, you can use it to upsize in a few years. But if you don't buy that starter home, it could end up taking even longer to get on the path to buying your dream home.
It's not always a bad thing to settle
There are certain aspects of a home that you can, and should, consider a deal-breaker. If you have kids, you don't want to purchase a home in a terrible school district, and if you need access to public transportation because you don't drive or own a car, you can't buy a home in an area without buses or trains.
But there are certain things you should be willing to compromise on when it comes to buying your first home, and those include square footage and upgrades. Sure, in an ideal world, you'd be able to put in an offer on a home you could see yourself living in forever. But today's housing market is far from ideal -- it's prohibitively expensive and very competitive. And so if buying a starter home is what it takes to help you get in the game, then it's worth going that route -- especially since you're not signing a commitment to live in that home for the rest of your life.
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