Brand-new houses are tempting—what’s not to like about being the first one to live in a home? But chances are good that when you buy a home, you’re going to be buying a pre-existing home instead. Over ninety percent of home sales in the United States are for homes that have had previous owners.
Despite the appeal of a gleaming new house, there are some real advantages to buying an existing home. But there are also some important potential downsides to consider. Here are some things to think about as you look for the home that’s right for you.
Budget
An older home that has been well maintained can be a better investment than a home that is ten or twenty years newer. This is especially true if the older home has recently had renovation work done. Carefully consider the value of what has been done to the home rather than just considering the year it was built.
Upgrades to existing homes are typically worth less than the same upgrades in a new home would be, so you’ll pay less for exactly the same features. Additionally, upgrades on new homes are limited to whatever a particular homebuilder is featuring at the time, since most homes in a given neighborhood are very similar. A search of existing homes makes it more likely that you’ll find exactly what you’re looking for, like quality built-ins or ornate woodwork.
Additionally, you are more likely to have room to negotiate on an older home than you are on a new home that is surrounded by many similar homes. But homebuilders may be able to throw in some upgrades on a new home, and you’ll also get a warranty, which may save you significantly.
Landscape and Neighborhood
The yards of older homes usually have a lot more character than the yards of new homes do. Previous owners have often done their own unique landscaping, and such yards usually have mature trees and shrubbery. Yards of new homes often come with nothing more than some seedlings, leaving much of the landscaping to be done by the home’s first owner. You are also likely to get a larger lot size with an existing home than you will with a brand-new home. And older homes tend to be in more established neighborhoods with nearby grocery stores, restaurants, and post offices.
Layout
A new home has trendier layouts, which might be just what you want. On the other hand, you may want more options than whatever is currently in style. Do you need a bigger kitchen, or would you prefer an oversized master bath? Do you want a walk-in closet, or would you prefer a breakfast nook? Make sure to consider your layout needs and be willing to look at older houses that might be able to accommodate you. An important note on older homes: make sure that your existing appliances will fit where you want them to—the home you want may not have been built to accommodate your oversized fridge, for example.
Potential Problems
Of course, older homes certainly have their share of potential problems, so make sure you consider these things:
☐ Structural integrity (large cracks in the foundation are a big warning sign)
☐ Draftiness of windows and doors (new homes are much more energy efficient)
☐ Age of roof
☐ Problems with dampness or mold
☐ Dangers of asbestos, if you plan to renovate
☐ Dangers of lead-based paint in pre-1978 homes
☐ Electricity and plumbing systems’ compliance to current safety standards
☐ Age and past maintenance of furnace, air conditioning system, and water heater
Remember, you can always do renovation work on an older home to make it just what you’re looking for. Just make sure that you are willing to do the required renovations. And make sure you get quotes for the work before you decide that it’s the home for you.
Nice newsletter. Good article. Good information. Thank you. Carol
For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.
What are the advantages of a score over 800
Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!
Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?