Buying your first home is a significant milestone in one's life, and it's important to evaluate what kind of home you're looking for before pulling the trigger. Newly constructed homes and pre-existing homes are both potential options, and you'll want to weigh the pros and cons of each one. If this is your first time looking into buying a house, here's a breakdown to help you make the right choice for your needs and budget.
Keeping the Budget in Mind
New Construction:
Potentially Higher Upfront Costs: New builds can sometimes have a higher base price than existing homes in the same area, given construction costs and builder fees.
Customization Costs: Upgrades and customizations can add to the overall cost, so be mindful of your selections, and pay attention to builder incentives.
Lower Initial Maintenance: New homes usually mean lower maintenance costs in the first few years, as everything is brand new and under warranty.
Financing: It might be easier to get a loan for a new home, but that may depend on the lender's current rates and requirements. Ask your lender upfront about your options.
Existing Homes:
Lower Initial Price: Generally, existing homes may offer more budget-friendly options and sometimes a lower price per square foot than a new home.
Hidden Costs: Be prepared for potential repair and renovation costs. Older homes may have outdated systems or require maintenance.
Negotiation: You may have more room to negotiate on price with an existing home seller.
More Location Choices: With existing homes, you may find more affordable options in established neighborhoods.
Location, Location, Location
New Construction:
Newer Communities: Often located in developing areas, which may mean longer commutes or fewer local amenities.
Planned Communities: New construction is typically in planned communities which allow for a better sense of community, with neighbors who are also new to the area.
Less Established: Landscaping and community features can take time to mature.
Existing Homes:
Established Neighborhoods: Typically, older homes can be found in more established areas, with mature landscaping, convenient amenities, and transportation options.
More Location Choice: You’ll have a wider net to cast if you’re looking at existing homes, with more neighborhoods to choose from, or areas with specific features that interest you, like parks, libraries, and other public recreation.
School Districts: Existing homes, especially suburbs, are usually found within school districts, which will be more appealing to young families looking for schools to send their kids to.
Thinking Long-Term
New Construction:
Modern Features: New homes offer up-to-date features, energy efficiency, and smart home technology, which can add value should you decide to sell in the future.
Customization: You can personalize the home to your specific taste and needs.
Lower Maintenance: With new warranties, systems, and appliances, you’ll be likely to have reduced maintenance for years to come.
Resale Value: Newly built homes may appreciate faster than older homes, thanks to modern features and systems.
Existing Homes:
Character and History: Existing homes frequently offer unique architectural features and can evoke a sense of history depending on the architecture.
Renovation Potential: You can renovate older homes to suit your tastes, creating additional value over time.
Established Areas: Homes in older neighborhoods could have better long-term appreciation, thanks to their location in well-established areas.
More Immediate: Typically, the move in process to an existing home is less stressful and faster than moving into a new construction home, since you won’t have to wait for construction to be completed before moving in.
Guidance for First-Time Homebuyers
Assess Your Budget: You’ll want to create a realistic budget, factoring in not just the purchase price, but also closing costs, property taxes, insurance, and potential maintenance or upgrade expenses.
Prioritize Your Needs: Determine what's essential (e.g., location, number of bedrooms, yard size), then list the rest of your desired items and features in an order of your choosing.
Explore Options: Research online, visit open houses, and talk to realtors. Consider exploring both new construction communities and established areas.
Factor in Long-Term Goals: Think about how the home will suit you in 5, 10, or 15 years. Will you need to expand? Are you looking for a long-term investment that can be passed down through your family?
Get Pre-Approved: Getting pre-approved for a mortgage allows you to shop confidently and shows sellers and builders you're serious. Check out this guide to help you determine if you can qualify for a loan.
Consider Your Lifestyle: Do you prefer a turnkey home or do you like projects and renovations? Do you need to be close to things, or is commuting ok with you? Is it important for you to be able to walk to shops or restaurants?
Don't Rush: Take your time to find the right fit for you.
If you’re unsure where to start with your own list, this guide for first-time buyers can help you figure out what to prioritize when making your list.
If you value customization, modern features, and less immediate maintenance, and you are ok with a developing neighborhood, then new construction could be what you’re looking for. If established neighborhoods, more control over price, unique character and the ability to be able to move in faster are more your speed, then an existing home might be a better fit for you. By carefully evaluating these factors, you can make an informed decision that fits your budget, lifestyle, and long-term aspirations as a first-time homebuyer.
For more tips on first-time homeownership, visit newhomesource.com/learn.
James Klingele
James Klingele holds a Bachelor of Science in Digital Media Innovation from Texas State University. He is a digital media specialist and content creator with a passion for storytelling in both print and digital formats. His work has included covering high-profile events like SXSW, where he contributed to content creation for global audiences. He has been a content specialist for NewHomeSource since 2024.