You want to buy a home, but you have not yet made that all-important decision: Should you buy a newly built home or one that has been previously lived in? New means exactly that: brand-new properties that have never been lived in or homes purchased in the preconstruction phase. Existing, or resale, homes are pre-owned properties.
Whether you are buying a new or previously owned home, having good credit scores will likely help you negotiate a better deal on your mortgage, potentially saving you thousands of dollars in interest payments over the life of the mortgage. Experts recommend that before you embark on the home-buying journey, you should examine your credit reports for any inaccuracies and look for opportunities to improve your credit scores.
Here are some things to consider when deciding if a new or existing home might be right for you.
BUYING A NEW HOME
In a 2014 Trulia survey, the main reason people cited for wanting to buy a new home was for the up-to-date features, including bigger closets, an open floor plan and a kitchen island.
The remaining reasons cited in the survey included (in descending order of popularity):
- Being able to customize the home prior to construction.
- Not spending as much money on maintenance and repairs.
- Living in a home that meets modern construction standards.
- Being the first person to live in that home.
- Living in a newly developed neighborhood near other new homes.
Kim V. Colaprete, a managing broker at the Seattle, Washington-based real estate company Team Diva Partners LLC, says that another benefit of building a new home is that you can have it certified as energy efficient.
“The biggest advantage to buying a new home is the energy-efficiency aspect,” she says. “In general, new homes are highly energy efficient and easier to maintain than older homes, even those that are updated or remodeled.”
There are, however, many significant disadvantages to buying new.
“The disadvantage of buying a new home is often price,” Colaprete says. “High quality, unique new homes are expensive to build, especially if they are built green and in the city.” While cookie-cutter new home developments might be more in your price range, the coolest, most customizable homes will be quite expensive.
Ultimately, new houses have not stood the test of time, says Cynthia M. Creasey, a real estate agent with the Seattle, Washington-based Lake & Company Real Estate.
Those contemporary features you were so excited about? They tend to become dated within 10 to 20 years, she says. Plus, you do not know what trajectory the new neighborhood will take, and the condition of the neighborhood, generally, affects the value of the house over time. Pre-owned houses, by comparison, have existed in their environment for a while.
BUYING AN EXISTING HOME
While buying an existing house may not be as sexy as getting one fresh with your thumbprint, experts say buying older homes could save you quite a bit of money. Nonetheless, penny-pinching is not the primary reason people may prefer buying used.
In the 2014 Trulia survey, the main reason respondents said they would opt for a preexisting home is to have traditional features, such as original wood floors, woodwork, ornate details, or stained or leaded glass windows.
The other reasons included (in descending order of popularity):
- To live in an established neighborhood near older homes.
- To pay less for the home.
- To live in a home that has some history.
- To live in a home that was built to historical construction standards.
- To remodel and make home improvements.
“If you are looking for a home in the city that is not a townhouse, an older home is usually more affordable,” says Colaprete. “For some, the advantage is getting a less-than-perfect home they can make their own or having a home that has survived the ‘test of time.’ A 100-year-old home built with old-growth fir and having survived a few earthquakes probably isn’t going anywhere anytime soon. Some folks just trust that more than something brand new, never lived in and untested.”
Some home buyers, Colaprete says, will also appreciate the Craftsman or vintage style of older abodes, which cannot be replicated in a newer home.
According to Colaprete, however, there are some disadvantages to buying an existing house.
“The disadvantage of an existing home, especially an older home, is that they are rarely energy efficient without some solid investment in new windows, insulation and heating,” she says. “Also, they do take a little more love and care to maintain.”
Whether you want to build a shiny new home or find a charming vintage one, check your credit reports regularly and keep an eye on your credit scores to ensure you get the best possible deal on your mortgage.