Planning a move can be an exciting time for your family. While you are shopping around to see what’s on the market, it feels like the possibilities are limitless. Before you get your heart set on a plan, however, consider the implications of buying a new construction home, or buying a fixer upper to renovate. Now is the time to take a critical look at your financial situation and goals to determine how much house you can afford. Additionally, take the time to decide upon and make a list of non-negotiable items you want when considering your next home.
The thought of purchasing a brand new house, complete with home automation and an in-ground pool, sounds appealing to just about anyone. Determine exactly what you need in a new home before you start browsing real estate catalogs, and then search for homes that specifically fit those parameters.
New construction homes can provide a sense of security that you won’t get from purchasing a fixer upper. Some of the benefits of new builds include:
- Low maintenance costs. Everything, from the sinks and counters down to the plumbing and electrical wiring, is brand-spanking new. You shouldn’t have to pay for many repairs for some time.
- Energy efficiency. While most new build homes aren’t necessarily built to the greenest of standards, they are made to meet more exacting standards than the homes of years past, so they will likely be easier on your utility bills.
- Modern conveniences. It isn’t just the house itself that will be new; appliances, alarm systems, entertainment systems, and even lighting options will support a modern, tech-infused lifestyle.
- Customization. When you purchase a home before construction is complete, you may have the option to customize it the way you want. Depending on the stage of construction, you might not be able to move the bathroom or add a fourth bedroom, but you may have your pick of countertops, faucets, light fixtures, and paint colors.
- Open floor plans. Most older homes you see do not feature the open floor plans, large bedrooms, walk-in closets, and spacious bathrooms that you will find in a new build.
- Warranties. Most new homes come with at least a ten-year warranty, and even longer warranties on many aspects of the building.
If low maintenance, energy efficiency, and modern design elements are a must, you might prefer to buy new. However, if you are more concerned about factors such as the neighborhood, having more land, the price point, or your home’s ability to accommodate some serious personalization, take a look at the benefits of buying a fixer upper:
- Lower or no HOA dues. Fixer uppers are often found in neighborhoods that have very low or no Homeowners Association (HOA) dues. In new builds, these dues can greatly increase the cost of owning a home and are often overlooked when considering a purchase. Buying in an area with low HOA dues can help reduce the annual costs of owning a home.
- Lower mortgage. When you buy a fixer upper, you will almost certainly get more house for the money, and end up with a lower mortgage payment to boot. Having a lower mortgage can free up cash flow or allow a smaller secondary loan to cover the cost of renovations or remodeling.
- Better neighborhood. New construction homes tend to be in new developments, where houses are often cookie cutter and wall to wall. Fixer uppers can be found in just about any type of neighborhood, and it’s quite possible to buy into a better neighborhood than you could normally afford by choosing a fixer upper.
- More land. Older homes are often situated on larger lots with mature landscaping that offers more privacy than you can usually get in the newer communities.
- Customization. New construction customization is mostly about the cosmetic aspect of the home. Fixer uppers have much more potential for knocking out walls, adding bathrooms, or setting the kitchen up exactly the way you want it.
There are financial risks to making any big purchase, especially when you take out a mortgage. There are advantages and disadvantages to both new builds and fixer uppers. The most important consideration is to know specifically what you are looking for in your next home. Before you buy anything, talk to an experienced real estate agent, weigh the advantages and disadvantages of a new build versus a fixer upper, and contact Sharkey, Howes, & Javer to help you determine just how much house you can afford given your circumstances and other goals.