If you’re looking to get a good deal on a quality home, it may surprise you to learn that new construction homes can be just as or more affordable than existing homes. We have buyers all the time who are shocked that they can easily afford a brand new home, with colors and finishes they get to select for themselves. But beyond just having a reasonable sticker price and a great loan, there are certain costs of home ownership for existing homes are often overlooked – costs that don’t really apply to new construction. We’ll explain – here are 5 hidden costs of existing homes that you won’t have to worry about with new construction:
1. Repairs
Just like anything else, houses age and require upkeep over time. Conventional wisdom says to budget about 1% of your home’s value in annual maintenance expenses. But how your home has been cared for can really send this number up or down. In a new construction home, your home has not been around long enough to be neglected by previous owners, so it should be in excellent condition, and, there is a warranty included with the purchase of your home.
2. Renovations
Not looking for a fixer-upper? Existing homes were built for someone else, so there are always changes that new owners want to make. Oftentimes, seemingly simple renovation projects turn into expensive, and time-intensive undertakings. With a new construction home, you’re getting a home of your choosing, with a layout and finishes that already work for you and your family.
3. Home Insurance
Your home's age and condition make a big difference in the cost of home insurance. Older homes are considered “high-risk” and generally cost more to insure than their new construction counterparts. And if you choose to renovate your existing home, you are required to report the increase in value, which will raise your rate as well.
4. Energy Bills
New construction homes offer significant cost savings in your monthly energy bills when compared to existing homes. For example, at Capital Homes, our 3-bedroom homes often have similar energy costs to a 1-bedroom apartment.
5. Competition
With a new construction home, you won’t get caught in a bidding war. There are multiple home sites and floor plans to choose from, and the cost is what it is. With today’s low inventory of existing homes, it’s hard to find what you’re looking for – and when you do, it often goes quickly, for above asking price.
Of course, there are many factors to consider when looking for a new home. Loan rates, property taxes, and more all make a difference when it comes to your true monthly payment. But, don’t forget to consider these hidden costs. It just might surprise you just how affordable a new construction home may be.
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