Many potential homeowners think buying a brand new home is out of reach for them, but the reality may surprise you.
In a market where housing demand is high, but supply is limited, it can be difficult for homebuyers to find a home and make a successful offer before the property is already sold to another buyer. Or, in some cases, a buyer may struggle to find an ideal house with so few options available on the market. Either way, the decision to build a new home could be a potential solution.
As with any home purchase, there are many factors to consider. A new construction home may require a higher mortgage amount, but purchasing an existing home could increase costs over time due to repairs, replacement, and upgrades that can quickly add up – so it’s difficult to say which option ultimately costs more.
In many cases, the construction of a new home is under warranty by the builder for at least one year, whereas the roof, foundation and water heater may be under warranty for as long as 10 years. (Of course, this differs from builder to builder; make sure to ask your builder of choice about their warranties. You want to be 100% clear about what is covered before you make a commitment.) If you choose to buy an existing home instead, you’ll be on the hook for the cost of any repairs or replacements needed after you close (unless you’ve worked out a home warranty).
Older homes are also often less energy-efficient, which may cost you more in the long run. However, if you do your due diligence and confirm the average annual energy expenses of the property (and have an inspector check the age and condition of major features such as the roof, furnace, plumbing, etc.), you can remove some of the mystery and be much more prepared for future repairs that will be needed. The benefit of a new home, of course, is that the appliances, furnace, etc. are less likely to need repairs in the near future, simply because they are new.
The process for purchasing a new home looks a little different than if you were to buy an existing property.
Here are some questions to ask yourself when considering buying a new construction home vs. a previously occupied home.
- How long does it take? The building process for a personalized production home usually takes between six and seven months to reach completion; however, it can sometimes take more than seven months, depending on your location, the weather, construction supply delays, and any requested customer design changes that are implemented along the way.
- What is the first step? Find out what you can afford. Getting pre-approved, budgeting, and deciding on the to-die-for customizations for your home is one of the most important steps in any (buy or build) home purchase process. If you choose to work with Waterstone Mortgage for your financing, you can streamline the process by choosing a builder that has already been verified and approved
- How do I finance a new home? Waterstone Mortgage’s Single Loan Close Construction Program helps streamline the process of building your dream home and securing permanent financing. A single loan covers your lot and construction costs all in one transaction. One loan. One closing. Easy peasy.
Whether you’re thinking about buying or building, reaching out to your local Waterstone Mortgage loan originator is a smart move.