Tips for Climbing the Housing Ladder with Your Starter House

For many people, their first home is not their forever home. It is the bottom rung on the property ladder. It is not necessarily a “perfect home”—more of a “perfect for right now” home. Below are some tips that can help you climb the housing ladder with your starter home.

1. Focus on saving money. The most important thing is “time in your market” and not so much “timing the market.” If you’re holding out until you can stretch and get the larger home of your dreams, keep in mind that unfortunately like everything else, it’s only getting more expensive. Now, this isn’t to say you can’t get there, but there could be an easier way besides waiting for the next job promotion or drastically changing spending habits to save up money of the next year or more. If you bought a “nice enough” home in your more comfortable budget, then allowed the equity build in that home, this could be your fast-track to your forever home. Instead of the market getting more expensive and running away from you, you are now in the market and your home equity will be growing, which will turn into your down payment on your dream home, which makes it way easier than drastically changing habits that may not realistically be feasible to get there. This method will allow your initial home investment to make your money work for you to get you in your dream home. It is also worth taking some time to shop for the most competitive mortgage you can find. That way, you will not spend any more than necessary on interest on your first home.
2. Choose a home with potential. You are probably going to be re-selling the home in a few years. So, look for one with the potential to sell at a higher price than you are buying it at. Aim for a neighborhood that is seen as up-and-coming. Also consider one that might sell for substantially more if you make a few upgrades.
3. Build equity quickly. Try and grow your equity in your new home rapidly. Doing so will give that equity more time to grow in value. This in turn will give you more money sooner that you can use to climb up the housing ladder to your next, more luxurious home. To grow your equity quickly, try making extra payments toward your mortgage when possible. Let them know in writing that the money is to be applied to the mortgage principal, not interest.
4. Think about sub-leasing. One more way you can climb up the housing ladder more quickly is to sub-lease a room in your first home to a tenant. While that may not be your ideal lifestyle, it is a way you can “hack” your mortgage payments, living more cost-effectively. You can then save up more money toward your next home purchase.

Buy Your First Home or Your Next One

If you choose your first home with care, and you follow smart practices like building equity quickly, you should find that it serves you well as a rung on the housing ladder. Each home that you purchase can bring you one step closer to your ultimate dream home.  

We can help you purchase a home in Missouri or 40 other states. To get started, please give us a call at (816) 631-9687.