The Pros and Cons of purchasing a new construction home

​​Deciding to buy a new home is a significant milestone, and one of the first choices you'll face is whether to purchase an existing home or a new construction. New construction homes offer numerous benefits, but they also come with their own set of challenges. Newly constructed homes often result in lower energy costs and require less maintenance, potentially lowering your monthly expenses.

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The cost break down

When deciding between purchasing an existing home or a newly built one, consider more than just the initial purchase price, think about the broken down monthly price. Let’s compare the total ownership costs between existing and newly constructed homes.

• The monthly payment for a new home isn't always higher than an older home once you breakdown the monthly payment. For example, let’s say the sales price difference of an existing home and new home is $50,000 at a rate of 5.49%. This equals a payment difference of $283.58/month. This is calculated using a 30 year fixed rate loan.
• An older home may have major components at or near the end of their life cycle. Consider roofs as an example, which typically last 25 to 30 years. Average roof replacement: Cost per square of $450 for 17 squares equals $7,650. If the roof on an older home needs replacement in 5 years, that's equivalent to an extra cost of $128 per month.
• Older homes typically require more maintenance and repair. Everything requires maintenance — from paint, siding, windows, electrical, plumbing, septic systems, and heating or cooling. Most of these components have expected lifespans of 5 to 30 years. A new home will not likely require maintenance or repair costs for a long while, compared with an older home that may already have deferred maintenance needs as soon as you move in. The annual maintenance expenses for an older home at a $250,000 value equals $208/month. The annual maintenance expenses for a new home at a $300,000 value equals $63/month.
• The cost of heating and cooling is typically lower for new homes. New homes save energy primarily by using more insulation and efficient mechanical systems. Before 1965, homes had little to none insulation, but now, ceilings can have up to 18 inches of insulation. Better insulation and a new high-efficiency heating or cooling system savings can go a long way toward making the total real cost of owning a higher priced home less than that of a lower priced, less efficient home.

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Adding up the savings from a new home vs. old

It's easy to see that the combination of savings from having little to no maintenance requirements, low energy costs, and potential tax savings can equate to both a lower cost of ownership and a far more enjoyable and comfortable way of life in your new home.

Pros of Purchasing a New Construction Home

1. Customization Options: One of the most appealing aspects of new construction homes is the ability to customize the property to your tastes and needs. From selecting floor plans and finishes to choosing appliances and fixtures, you have the opportunity to create a home that perfectly matches your vision.

2. Modern Amenities and Design: New construction homes are built with the latest architectural trends, energy-efficient systems, and smart home technology. This means you can enjoy modern layouts with open floor plans, larger kitchens, and advanced features that might not be available in older homes.

3. Lower Maintenance Costs: Since everything in a new home is brand new, you’re less likely to encounter immediate maintenance issues. New appliances, roofing, plumbing, and HVAC systems typically come with warranties, reducing the likelihood of unexpected expenses.

4. Energy Efficiency: Modern building codes require higher energy efficiency standards, which means new homes are better insulated and equipped with energy-efficient windows, doors, and appliances. This can lead to significant savings on utility bills over time.

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Cons of Purchasing a New Construction Home

1. Higher Costs: New construction homes often come with a premium price tag compared to similar existing homes. The cost of customization and the allure of modern amenities can add up quickly, potentially making it a more expensive option up front.

2. Potential Construction Delays: Building a new home is a complex process that can be affected by various factors such as weather, supply chain issues, and labor shortages. These delays can push back your move-in date, causing inconvenience and additional costs. TIP: Choose from new move-in-ready homes if you’re not willing to wait!

3. Limited Negotiation Room: When purchasing an existing home, there's often room for negotiation on the price. However, builders of new construction homes typically have set prices and are less likely to negotiate.

4. Less Established Neighborhoods: New construction homes are often located in newly developed areas that may lack the established community feel and amenities like mature trees, local shops, or schools that older neighborhoods offer. It may take time for the area to develop fully.

Conclusion

Purchasing a new construction home comes with its own set of advantages and disadvantages. The ability to customize your home, enjoy modern amenities, and benefit from lower maintenance costs are compelling reasons to consider new construction. However, higher costs, potential delays, and the possibility of living in a less established neighborhood are important factors to weigh.

If you’re interested in owning an already built or soon to be built new construction home, you’re going to want to keep reading. Let us help you secure a mortgage loan with an interest rate as low as 5.125% (5.417% APR) on select Allen Edwin Homes!

*Disclaimer: Based on a $386,000 FHA loan amount with a 3.5% down payment, the APR is 5.417%. The estimated monthly principal and interest payment is $2,138. This example does not include taxes, insurance, or HOA fees, and your actual payment obligation may be higher. Loan terms include 360 monthly payments. Rates are subject to change and may vary based on creditworthiness and loan details.