Buying a home is exciting, and a little bit scary. It’s usually the biggest purchase that you will make in your lifetime, which is why it’s so important to be sure of your wants and needs before you decide what kinds of homes you want to start looking at.
One very important, and often overlooked, factor in buying a home is whether you want to purchase a new property, or if you would rather buy an older one. This alone can affect the price, upkeep, and appreciation of your dream home, and there are pros and cons to either choice.
In this post, we’ll compare new and previously-owned homes from a first-time buyer’s standpoint.
What’s My Budget?
If you obtained a pre-approval, you know how much you are allowed to use, but do you know how much can you afford, and how much are you comfortable with spending? Just because you can spend $500,000.00 doesn’t mean that you should.
How much you have to use will affect the kind of home that you purchase in many ways. New homes tend to be more expensive, while previously-owned homes are sometimes cheaper. In some cases, if you buy a brand new house, you will have to sacrifice size, whereas you may be able to find a bigger, older home for less.
The first thing that you need to know before making a decision is how much you are willing to spend, then you can look into your options for both new and used properties.
Types of New Properties
For first-time buyers, new starter homes tend to fit into four types, starting from what are generally the cheapest, to the most expensive:
- Single-family homes
Condos are usually the cheapest of the four, since they offer no outdoor living space and are similar to apartment buildings. You must work with a condo board, and also pay maintenance fees for the building. You own no land.
Townhomes, or row houses, are separate units built in rows, side-by-side. They have small yards, and usually more space than condos. Townhomes can either share one wall or both with neighbors. Often, you are required to run any changes through the property manager, and you own very little actual land.
Duplexes are made up of one large home split into two. They can have decent sized yards, and only share one wall with the people next door. Some have garages or sheds as well. Each homeowner owns half of the land that the property is on.
Single-family units are typical subdivision homes, and only house one family each. They can have larger yards, more privacy, and more land. Any and all upgrade or maintenance decisions and costs fall on the homeowner.
Of course, when buying new, you can always choose to purchase land and build a home as well. Some of your options in that case include:
- Purchasing a mobile home
- Building a modular home
- Designing a custom single-family home
While many people choose to build homes later in life, most first-time buyers choose a starter home for their first purchase as opposed to building a house from start to finish.
Benefits and Downfalls of Buying New
New homes are just that—new! When buying from certified builders, you will have the assurance of knowing that your home is up to code, and that everything from your foundation to your wiring is new and undamaged. When you have a new home, you have the benefits of knowing:
- Your home has been built by professionals
- You often have your choice of paint, flooring, and other esthetic aspects
- There won’t be any disclosure issues from previous owners
- Since the home is new, it will likely require less maintenance
- You won’t be looking at any expensive upgrades, such as a roof or flooring for a long time
You’ll also miss out on some of the stress of buying a property that has been lived in because the negotiation process should be much shorter, and you won’t need to worry about things like upgrading appliances or doing renovations.
Those are some pretty significant benefits, but buying new isn’t always the best decision for everyone. Some of the negatives might include:
- Higher cost
- Only being able to choose from new areas and neighborhoods
- Continued construction if there are other developments in the area
- A longer wait period before being able to move in
Often, previously-owned homes are fairly turn-key properties, and can be found in the most established and desirable neighborhoods. If they have been well-maintained, you may only need a few cans of paint to make them your own.
Creating a Wishlist
If you still can’t decide which type of home is best for you, it’s time to create a list. First-time buyers should do this anyway, but if you haven’t created one yet, you’ll want to include:
- Your requirements (number of bedrooms, bathrooms, yard size, etc.)
- Whether you are willing to do upgrades or renovations
- Your price (and your absolute maximum)
- Proximity to amenities
- How long you expect to live in the home
- What you expect in the long- and short-term
- What your extra wants are
Before contacting a realtor, really take a look at your list and carve it down into your basic requirements. Now you need to figure out if your list better suits a new property, or one that has been owned before.
Start by asking yourself questions such as:
- Am I willing to spend more to save time and effort, or do I want to save money?
- When do I want or need to move in?
- Do I see this as a long-term or short-term property?
- Is there a specific neighborhood or area that I want to live in?
- Do I have extra money to put towards renovations?
Once you have your answers, and you know what you want in a house, contact a realtor who can start looking for available properties for you to view.
Starting Your Life in a Starter Home
Whether you choose an older home or a new one, it’s the first step in your new adventure of homeownership, and you should take a moment to enjoy it.
The home buying process doesn’t need to be stressful. You can help to take a lot of it off of your own shoulders by being proactive and making decisions before you need to. Having a clear idea of what you want, what you need, and what really won’t work for you makes it easier on both you and your realtor, as well as the seller.
What was your first home? What do you recommend as the best kind of starter?