Thrifting has become a popular trend. People are looking for used items that still have value. Some will re-purpose them, others will do a makeover, and some will use as is.
When it comes to homebuying, does this approach deliver the same value? You’re making a huge investment—probably the biggest financial one of your life. What do you expect in return?
A resale or older home is often perceived as a better deal, because you can buy more house for less money—or so it seems. Whether you’re looking a buying a new home or a resale, it’s what you can’t see that matters.
Here are a few things for comparison when you’re looking at purchasing a home.
- What will need replacing soon? In a new home, you can be confident that you won’t have to spend money on a new roof, HVAC, appliances, windows, plumbing, or other features that have a lifespan. Calculate any replacement estimates into your purchase price.
- Is it “green”? From drafty windows and doors and insulation to energy-guzzling appliances, how energy-efficient is the home you’re considering? What’s the air quality? Appliances and plumbing (e.g. toilets, faucets, showers) have become much more energy-efficient over the past few years, and the newest ones can save hundreds on your annual utility bills.
- How much do you need to invest on cosmetic improvements? This is where many homeowners underestimate the cost of their “dream home”. It’s never “just a few coats of paint”. You’ll probably change light fixtures, wall coverings, and flooring, to say the least. You might want to knock down a wall to open up the floor plan, or replace the kitchen cabinetry. Maybe you need to rewire in order to accommodate today’s electronics. In addition to the cost of any remodeling, there’s the time involved. Do you have the patience to see it through?
- What’s the resale value? Never buy a home without considering the resale value. Situations change. No matter how certain you are when you sign the mortgage papers, there’s always the chance that you will move again. Be clear about what you can expect to regain from this investment.
- Are there any purchasing incentives? Interest rates are still incredibly low, although they will continue to creep upward. Homebuilders frequently offer incentives, like no closing costs.
Both new homes and resales have their unique appeal to homebuyers. Regardless, don’t fall in love with what you see. Think about the other factors that contribute to the actual cost of buying your new home.