In terms of purchasing a new home, there are quite a few important decisions that you will be faced with, especially when it comes to buying new construction vs. existing homes. Oftentimes, this is a decision that seems like it can be an easy one. On one hand, homes that are newly built are able to provide important advantages in the sense that you will be able to choose the specific floor plan that you like, as well as the appliances that you want; however, in terms of location, you will be pretty much limited in terms of where you will be able to begin construction on the home itself, and when it comes to construction costs, this is something that will generally outweigh some of the most obvious lifestyle advantages.
On the other hand, existing properties are able to offer more flexibility for the buyer in terms of both location and cost; however, some of the most common disadvantages include difficulty with securing financing, as well as increased amounts of competition.
Here are three of the most common key points to consider between new construction vs. existing homes in order to help you decide which option may be the best for you.
- One of the most important considerations is the needs for any potential repairs and renovations that will need to be made to the property that you are interested in. While newer homes are unlikely to need any significant amounts of repairs are approximately seven years – and while they will also likely be covered under some form of warranty in any case – older homes will likely end up needing some renovations or repairs that will result in an increase of the total purchase price. These will typically be minimal; however, buyers need to address them as both finances and time permit.
- Another important consideration involves additional costs of ownership. In terms of newer homes, these are generally much more energy efficient than older homes due to the fact that they have been constructed using newer materials, state of the art technology, and better insulation. Older homes, however, are typically less energy efficient and, as a result, will experience higher monthly expenses for new owners. Additionally, there are other factors to consider such as insurance and property taxes, both of which can have definite impacts on the total cost of ownership.
- Cost considerations is something else to keep in mind as well due to the fact that there is a rather large gap between the prices of newer homes and older homes. The average cost of a newer home is approximately $300,000, which doesn’t include acreage, while the average cost of an older home is approximately $278,000, which is roughly $60,000 less than the total cost of new construction. This is something that can end up adding up to a significant amount of savings over the life of your home loan depending on the actual terms of your mortgage. Furthermore, there is even more of an opportunity for further negotiations when it comes to purchasing an existing property, which is something that can end up resulting in a lower purchase price, something that is often unavailable with newer homes.