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New or existing? How to tell which home is right for you

Posted on Tuesday, October 28, 2014 at 10:43:39 AM

Better times could be ahead for the housing market. A report from Bloomberg showed that profits for major homebuilder Lennar are on the rise, a sign that more new homes could be flooding the market. This is good news for many homebuyers looking to couple affordable residential financing rates with a large inventory to choose from.

If you are interested in jumping into the housing market, make sure you take note of a few pros and cons along the way. To help clarify some key points, Home Loan Investment Bank's Patrick Deady recently offered some advice for prospective homebuyers:

"Buyers should be aware of the pros and cons of purchasing new versus existing homes," Deady explained. "The main pros of new homes are that everything is brand new and you usually have the ability to customize amenities to your desire. The con might be that there is usually a slight premium for new housing, which is reflected in the price."

On the other hand, you could choose an existing, or "used," home. This option has pros and cons as well, including a lower price tag but higher renovation costs, as Deady noted.

"Regardless, buyers should evaluate each transaction individually to determine which option is best for them," he added.

So, how do you choose? To begin, you must decide which features are important to you. For example, is it price, or is it a brand-new appearance?

"Can you tolerate a carpet that has seen better days or would you need to replace it immediately?" Deady asked. "If you have a low tolerance, then you need to make sure you have the cash reserves or another plan to replace the carpet. If you cannot tolerate such circumstances, a new home may be better for you. In any case, consulting with a professional Realtor and Mortgage Banker is the first step to prepare for the purchase of a new home."

Given the low residential financing rates present today, you may be ready to pursue homeownership. Remember to evaluate your economic situation closely, however, including the items you want to see in your next home.