Here we will detail the benefits and drawbacks of new homes against that of old construction homes. Draw your own conclusions and see which better suits your financial goals.
Nothing is more satisfying than the keys to a new home handed over to you, is there? The glistening of newly installed fresh pinewood floors flashing from the nifty modern kitchen will make any relocating homeowner feel right as rain. Although, there are a few things that folks who are just moving in need to know about new construction. Weigh the pros and cons of new homes for yourself before deciding to move.
The Advantages of Newly Constructed Homes
- A better choice for the long term.
If you're planning to stay in your new for at least 10 years, then a fixed-rate mortgage should be your best course of action since you know exactly how much you'll be paying monthly at any point in time.
- Location is everything.
Homes in a newly inhabited area will go up in value as more real estate projects start pouring in. The more home equity you build over the long run, the easier it will be to pay off the costs of your mortgage.
- More customization for less money.
Home builders and their financing departments can work with you in adding a personal touch in terms of style, paint, shed roofs, and other additions to be financed in with your mortgage.
With no home appliances malfunctioning and cracks in the walls to worry about, new homes can make give you the peace of mind that you expected.
- Up with the times.
Developers are leaving behind the one-to-one operations of home appliances and moving in the direction of integrated, intelligent, user-friendly technology. Home security, central air conditioning, heating, lighting, garage door sensors, and kitchen appliances all operated using a single phone app? Yes, please!
Projections by the U.S. Department of Energy (DOE) show that close to four million American homes will be solar powered by 2020. With soaring house prices and interest rates on mortgages, it is only smart for a homeowner to switch to solar power and save thousands of dollars worth of energy bills over the long haul.
- Smarter use of space.
New and trendy kitchen cabinets, slide-out pantries and storage closets today can house more within a smaller footprint.
- More affordable.
Even when a new home is more expensive than older construction, you can still save tens of thousands of dollars on unnecessary home improvements, repairs, and unwelcomed surprises.
The Disadvantages of Newly Constructed Homes
- Lack of nature.
A disappointing aspect of new construction is that lawns are permeated with the soil and the surrounding trees have not been given enough time to grow.
- House settling.
Human beings are not perfect, and neither are construction workers or engineers. Unforeseen problems might rear their ugly heads in the form of slight cracks in the walls and uneven floors a short while after the house has "settled" into its place, however, major issues like these rarely occur.
- Downtown and traffic.
If you're relocating in traffic congested cities like Seattle, San Fran, or LA, commuting to and from work every day might just trigger impulses of road rage that you never thought you had.
- 20% more expensive than older homes.
New homes can demonstrate a higher risk and impact your mortgage if you don't do your homework for the area. Twenty percent more money can be significantly damaging to your financial standing if you don't do everything you can to make moving less of a gamble. Remember, that 20% could instead be used for a larger down payment and better mortgage.
Old construction houses can sometimes mean they were built with durable siding material like stone or brick. These can be incredibly beautiful and timeless homes that often capture an enigma make even the most pretentious contemporaries well up with nostalgia.
These built to last low-maintenance structures have had the strength to withstand the different weather conditions over the decades and even centuries. On the other hand, old construction homes will likely require pest control and rigorous inspection for damages and cracks.
The Pros of Old Construction Homes
- A better choice for the short term.
An adjustable-rate mortgage (ARM) will be your best bet if you're planning to move and sell 5 - 10 years into your mortgage. This can be a safety net if an old construction home becomes high-maintenance. ARMs are also much easier to refinance and have lower interest rates than fixed-rate loans.
- Original craftsmanship.
No two people are exactly alike. This is evident in the way old homes have been crafted by hand to give the home a personal and unique look.
- More backyard space.
Back when land was cheaper, that often translated into a larger structural footprint and more outdoor living space.
- Damages are accounted for.
Any issues with plumbing, wiring, leaking, or poor construction will be brought to your attention before you buy the home.
- Settled neighbourhood.
Being socially active in your community starts with your next-door neighbour.
Older homes have given the trees in their proximity a chance to breathe, literally. If large picture windows are facing your backyard, that dramatically increases your home value.
- Possibly 20% cheaper.
Homeowners that are experienced and resourceful in their approach to building home equity will benefit the most from cheaper homes. That 20% you were going to use a newly constructed home is now money in your bank, giving you the freedom to lower your loan balance and pay it off faster.
- Upgrades can be financed into your mortgage.
The costs of improving an older home can be rolled into your mortgage.
- Less risk.
In a tested location, a neighborhood's documented trend in market value can make it predictable and easy to budget for a mortgage.
The Cons of Old Construction Homes
- Some can be high-maintenance.
Somethings are just bound to break with age.
- Can be inefficient.
Old homes use more energy to power new appliances and are inefficient when it comes to storage space.
- Plumbing replacement.
The noisy clatter of old water pumps might make your bathroom experience unbearable and old water lines may not allow high-capacity faucets work as one would hope.
- Neighbourhood market value might be in decline.
If you don't know the progress of your neighborhood's market value, then you won't be able to know if the price of your home is nearing a decline.
Unsure about some of these mortgage jargon? Consult our comprehensive mortgage glossary to clear any confusion.