Finding a Home: New or Used?

Here are some points to consider when deciding between new and existing homes:

Location. In many cases, there may not be any new homes available in the area in which you want or need to live. In this case, the decision is easy…an existing home it is! But if you really had your heart set on purchasing a new home, you might consider expanding the area in which you look for a home—you never know what great new communities you might find!

Amenities. You should also consider what sort of activities you enjoy, and how easily you can engage in those activities near your home. Consider that many older communities were built before it was standard to include amenities like parks or trails into the overall plan, meaning you may have to drive to access fundamentals like parks, fishing areas, or open spaces.

Size and Layout. Lifestyles have changed dramatically in the past 50 years or so, and many homes built in prior decades simply don’t have the flow and floorplans that today’s homebuyers desire. However, for some homebuyers, the charm of an older home is an attractive lure, despite the inconveniences of smaller rooms or closed-in layouts. It’s up to you whether you want to purchase a home with a modern, thoughtfully-designed floorplan, or if you prefer to take on the expensive process of demolition and remodeling of an older home on your own.

Condition of the Home. One place where new homes are a clear winner is in home condition. When you buy an existing home, there’s always a question about what you’re really buying. Home inspections can only tell you so much, and many hapless homebuyers have closed on an existing home, only to find out in the first months of ownership that the home had some hidden—but major—issues that have to be addressed, at a high cost. When you buy a new home, you’re getting new construction that hasn’t been weathered or worn over the years, which means there are no ugly surprises lurking under roof tiles or in the foundation. With a new home you’re also getting a home built according to modern codes and using modern techniques, which can save headaches that older homes may be more prone to, because these techniques and codes simply didn’t exist when they were built. And most builders, provide their homebuyers with the comfort of knowing that their  homes are covered by a warranty, meaning that any problems that do arise can quickly and easily be addressed by the builder, saving you time and money.

Energy Efficiency. Brand-new homes have been built to the latest standards, with the benefits of the latest technologies and materials. Many older homes suffer from a lack of insulation, or haven’t been properly sealed, leading to leaks that waste precious energy when heating or cooling your home.

Location, Location, Location. Once you’ve made the decision about what type of home you’re most interested in, location becomes your primary concern. Keeping your budget and needs in mind, it’s important to make a thorough search of your options. Most important during your home search is to keep your mind open. Many prospective homebuyers limit themselves unduly to a particular neighborhood, then become frustrated when they can’t find what they want, or can’t find anything in their price-range. It is key to keep your options open, and be willing to explore other areas that you may not have previously considered. Such communities may be perfect for a number of buyers, but unless they visit these communities, they may never even know what a great fit they would be. You don’t want to miss out on potential neighborhoods or towns that would be right for you, so take the time to explore; you certainly don’t want to find out about a great new community after you’ve already bought another house.

Qualifying vs. Approval.  Now that you’re actively looking for a home, you’ll also need to start thinking about financing, which we’ll talk about more in-depth in the next chapter. You do need to understand a few terms, which you may run across while you’re looking for your new home. In particular, you may be asked during the home-search process about whether you are “pre-qualified” or “pre-approved,” both of which have to do with your prospective mortgage. Some home sellers will not go into a contract to sell unless a buyer is either pre-qualified or pre-approved by a mortgage lender.

Being pre-qualified or pre-approved means that as a buyer, you have started the process of securing a loan to buy your new home. Be careful, though, because there is a big difference between being qualified and being approved.

Pre-qualification means that you have spoken to a mortgage lender, and have provided a summation of your financial situation, including salary, assets, and debts. The lender has reviewed the numbers and “pre-qualified” you for a loan based on the information you have provided. This pre-qualification is not a guarantee of funding, and you may or may not be able to secure funding once you submit your actual mortgage application. If you only talk to a lender over the phone, and do not submit any actual documents, you’ll likely be pre-qualified.  Pre-approval means that you have processed an application with your lender, and provided them with documents for verification of income, assets, and liabilities (or debts).

Pre-approved loans are ready to go, and are usually only pending the approval of the home you wish to purchase. Many sellers of existing homes insist that a buyer be pre-approved before accepting their offer, because with pre-approved buyers there is no waiting period, and they know that the buyer will be able to come through with the funds for purchase. In contrast, builders selling new homes are happy to work with buyers without forcing them to go through this pre-approval process. In fact, our Mortgage Specialists will actually help you determine your mortgage eligibility and begin the application process for you, making buying a new home significantly less time-intensive than purchasing an existing home.

 

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