Buying a home is a big, exciting step no matter the season of life you’re in. If you are looking at buying a new construction home, you will be making a lot more decisions than if you were buying an existing home. There are other things to consider with a new construction home, with cost being the primary concern for most buyers.
If you are in the market for a new construction home, read on to learn some of the pros and cons of this type of real estate investment.
What Are the Pros of Buying a New Construction Home?
One of the biggest perks of buying a new home versus an existing one is that everything is brand new. You don’t have to worry about scrubbing, cleaning, or covering up anything that previous owners may have done. You get to walk into a brand new, perfectly clean, unused home and make it your own.
Another benefit of a new construction home is that you can make a lot of choices for the home while it is still being built. Want the master bedroom on a separate floor from the others? You can make that call during the building process. You can choose paint colors, carpets, hardwood floors, and any number of finishes when you are involved in the construction process.
New construction homes are also going to be more energy efficient than older homes. Many new construction homes today are being built with smart home features and the most energy-efficient products on the market.
There are also modern conveniences when purchasing a brand-new home. Things such as dishwashers, wine coolers, and modern refrigerators and microwaves are standard in most new constructions today. If they are not already part of the plan, most new homes have the space to easily install these modern conveniences.
What Are the Cons of Buying a New Construction Home?
One of the main downsides of buying a new home is the cost. A new home is going to cost you more than an older home, or one that someone has already lived in. Limiting customizations and opting for mid-grade materials can lower the overall cost of a new home, but even with these cost savings, a new construction home will cost more than a used home.
Additionally, new homes can take longer to move into than older homes. Construction may need to be finished, or even started, depending on the build progress of the home. A new construction home can take several months beyond the typical 30- to 60-day closing window for existing homes on the market. There is also a risk of delays in the building of your new home, meaning you may have to figure out different living arrangements if the build is not done on time.
Property taxes are also assessed on the value of the home, meaning that a new construction home will also come with a larger tax burden. When working with a mortgage broker, you’ll want to discuss the potential disadvantages that come with higher property taxes.
How Much Does a New Construction Home Cost?
When deciding if new construction is worth it, cost is a crucial factor to consider. According to the U.S. Census Bureau, the average cost of a new construction home in 2022 is $423,300, while an existing home averages $350,000, making the average cost of a new construction home about $70,000 more than a pre-existing home.
One key cost difference to consider is the potential maintenance and repair costs of an older home. Newer homes typically need less upkeep because everything is brand new. An older home requires more maintenance and is more likely to have things break and need to be replaced. Buying a new build can be a good idea if you are looking to offset the costs of maintenance and repair on an older property.
Tips for Buying and Financing a New Construction Home
Before you are ready to buy a new construction home, do your research. Understand the pros and cons and know what you are looking for in a house. Having a list of must-haves and things you want will make the process of finding a builder much easier. You can also work with a real estate agent to find the builder and location that is right for you. They are experts in buying and selling homes and know a lot of people in the industry, making them an excellent resource for you in the process.
If you are purchasing from a developer, a loan can be obtained and the mortgage interest rate can be locked for a certain time. If your house is not yet nearing completion, extending the rate lock time period would be helpful. Building timelines get delayed, so this ensures that the interest rate stays frozen, usually for a fee when you agree to the terms of the loan.
Working with a local lender is helpful as well. They offer flexibility and knowledge of the local market that bigger banks may not have. If you are buying a new construction home, it can be helpful to have someone local on your side.
If you are looking for financing options for a new construction home, look no further than First Fidelis. We work one-on-one with every customer to ensure they are receiving the best interest rate possible. Contact us today at 913-205-9978 or get started with our pre-approval application.