If you are a homebuyer seeking to take out a mortgage on another property, there’s a chance you’re considering either a new construction home or an older home. Both types of homes have their pros and cons.
For example, older homes often have a unique rustic aesthetic that’s hard to come by in newer homes. They also usually cost less than new construction homes. On the other hand, new-construction homes may require less maintenance since they haven’t been on the market that long.
We’re here to help you with your decision-making by discussing the pros and cons of both homes. By the end of this article, you’ll have a better idea of which home will suit your preferences and circumstances.
Read on to learn more.
It’s always helpful to look at the benefits and drawbacks of both types of homes before you make a decision. Let’s start with the advantages and disadvantages of buying new construction homes.
One of the advantages of opting for a new construction home is safety. Developers tasked with the construction of new homes will follow up-to-date building regulations. These regulations are in place to ensure the new home’s safety and structural stability. A new construction home is likely to be safer and compliant with current building codes.
Because of the safety standards that new homes have to observe, the need for maintenance will be less for new homes than for older ones. New construction homes typically won’t require maintenance until they’re a few years old. And, very often, the newly constructed home will come with a warranty that covers the first few years.
Depending on where you are in the buying process, you can personalize or customize a new construction home. All you need to do is reach out to your builders and inform them of any specific details you want before the house’s completion.
All of these perks can be yours when you select a new construction home. However, be aware of the upfront costs. With these selling points comes a potentially hefty price tag — one that’s often 20% more than what you’d have to spend with an older existing home. Your mortgage advisor should find creative solutions to ensure your mortgage is a good fit for your needs and budget.
Older homes will likely have historical significance that adds to their charm and market value. The history of an existing home becomes apparent in the house’s unique design.
Older homes look unique due to the design trends that were prevalent during the times of their construction. You’ll have a house with character when you opt for an old or existing home.
Also, older homes are readily available, unlike new-construction homes. An older home requires little to no time for construction or inspections. It’s ready for you to buy and move in upon your mortgage approval. An inspection will uncover the extent of maintenance, repairs, or renovations that will be needed. A mortgage professional will often be able to negotiate mortgage terms that ensure your purchase price is contingent on the home being considered viable after inspection. Additionally, they might be able to get the costs for necessary repairs deducted from your monthly mortgage payment.
The only areas of concern are safety and energy inefficiency. After all, older homes won’t necessarily be compliant with today’s building codes. Older houses are also less likely to have modern amenities like smart appliances or energy-saving outlets. Older homes may also require renovations or cosmetic upgrades. A licensed inspector will usually uncover all potential problems and major concerns, as well as recommended fixes. We highly recommend utilizing a private inspection to get the most thorough evaluation of your older construction home.
You can go with a new construction home if your budget allows you to do so. As mentioned earlier, the upfront costs of a newly constructed home will be higher than those of an old or pre-occupied home.
You can also select new construction homes if time isn’t an issue. After all, a house’s construction can take time due to the actual construction and necessary inspections.
A new construction house is also an excellent idea if you want more customization or to add your personal touches to the house. New construction homes in a housing development will often follow a developer’s design specs and must comply with HOA regulations. However, by informing your builder of the finishes you want, you’ll get a house that’s closer to the one you imagined.
It may make sense to pick an older home over a newly constructed one if budget is a concern, provided renovations, repairs, or cosmetic upgrades won’t be excessive. As mentioned earlier, older homes will cost less upfront than new-construction homes. Perhaps the only exception would be homes that have a historical track record that dates 100 years or more.
A home that has been around for years demonstrates signs of durability and value appreciation. As long as you do your best with the older house’s upkeep, you can expect the home’s value to increase with time.
Lastly, older houses are an excellent investment if you’re in the business of flipping homes. For an affordable price, you’ll be able to acquire a property you can customize and sell for a higher market value.
New construction homes are likely to be more expensive than old or existing houses. According to Market Watch, a new house can cost you 20% more upfront than buying an existing home on the market.
At a glance, it would seem that the difference is substantial. However, here’s something to consider. A newly constructed house costs more upfront, but because a new house will be available in its pristine condition, maintenance work won’t be necessary until after a few years.
On the other hand, an older or existing house may be cheaper when you purchase it. However, be aware that you’ll have to bring it up to current building standards and it may require renovations or repairs. As a result, the costs can add up.
At the end of the day, whether you choose an older, existing home or opt to construct a new one depends on your situation and preferences. Of course, one key difference that sticks out is price.
As mentioned earlier, new homes may cost more than older houses. However, older houses may require renovations and upgrades.
With that said, your decision cost-wise becomes a question of whether or not you can afford the upfront costs of a home and whether or not you’re willing to renovate.
Beyond that, new and older houses are both worthy investments for many homebuyers like yourself. It just comes down to what you want and your financial situation.
Your mortgage professional can help you determine how much you could afford and help you find the best options for your needs. Curious to learn more about your mortgage options? Email info@astarteam.com or call 888-ASTAR-11 (888-278-2711) to start the loan application process today!
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