The Home Buyer’s Dilemma
Over the years, I’ve worked with all kinds of home buyers. A lot of times they’ll ask me whether they should be looking at existing homes or new construction. Like any good advisor, I end up answering their question with more questions.
After all, I want to help them figure out what’s right for them.
When do you want to spend your money?
That may sound funny, but it’s a key question when it comes to deciding between an existing home and new construction.
- Save upfront. Existing homes let you save upfront. All things being equal, you’ll pay about 20% less to purchase an existing home than for new construction.
- Save annually. New construction gives you a chance to save every year on utility bills, homeowner’s insurance and home maintenance. This money really adds up.
In the end, if you plan to stay in the home for ten to twenty years, things should come out about even financially.
What type of homeowner are you?
Do you enjoy maintaining your home and handling repairs? Are you good at it? If so, then you might enjoy an existing home more than new construction. Some homeowners really take pride in handling everything themselves.
On the other hand, if you prefer to “call the guy,” then you’d probably save a lot of money with new construction. New construction comes with a honeymoon period of ten to twenty years when very little needs to be done.
Where do you want to live?
Location is a big factor in being happy with your home. Existing homes tend to be in central neighborhoods and close to work and school. New homes tend to be in new developments, further out of town. Think about your daily routine. What location makes the most sense?
In the end, you want to find a home that feels right for you. Whether it’s an existing home or new construction, you’ll kind of know it when you see it. Think and plan, but listen to your gut, too.
Home Buyer's Guide to Trading Up
Daunia is an Assistant Vice President of Mortgage Loans at the Hastings branch of Heartland Bank. She is a lifelong resident of Hastings with 16 years of banking experience. She enjoys serving the neighbors in her community.
