FinancingIt's the same financing process when qualifying for a new or existing home, says Rob Ross, vice president and branch manager of MVB Mortgage in Reston, Va. The loan programs and fees are the same, too. "The big difference is that you're likely to close a lot later on a new home than a resale," he says. "You can usually lock in your mortgage rate for up to 60 days for free, but if you need to wait six months or a year to close you'll have to decide whether to risk higher rates or pay a large fee to lock in current mortgage rates." Ross says that some lenders allow you to lock in your rate for as long as a year, but this can cost up to two points, which would be $6,000 on a $300,000 loan. Fees for locking in your rate are usually nonrefundable, he says.
4 reasons to buy new
No. 1: Customization"A lot of buyers like new homes because they can choose everything from the stain on the hardwood floor to the granite for their counters," says Verni. "Some builders allow you to change the layout and move walls." Lewis says the amount of customization depends on how expensive the home is.
No. 2: Low maintenanceBuyers like the idea that they won't have to do much maintenance on a new home, says Lewis. Most builders provide warranties that require them to make repairs. Existing homes typically require more money for upkeep down the road, says Verni.
No. 3: Modern amenitiesNew homes have to be built to the latest code and most builders use the latest technology, including USB openings on electrical outlets, wireless Internet access and energy-efficient features, says Verni.
No. 4: Modern styleNewly designed homes match today's tastes like an open family room and kitchen, higher ceilings and more storage space, says Verni.
4 reasons to buy used
No. 1: Cost"The biggest advantage to buying used is the price," says Lewis. "You pay a premium for buying new." In an existing home, you know what you're getting for the price and don't have to worry about builders doing a "bait-and-switch for upgrades that buyers thought were standard." Homeowners tend to negotiate more than builders, although builders sometimes offer incentives like paid closing costs to help offset the higher price, says Lewis.
No. 2: Waiting timeExisting homes are available on the specified move-in date, whilenew homes can take months to build, says Lewis.
No. 3: Unfinished communityIn a used home, you know what amenities are in the community and nearby, while in a new community you don't always know if planned amenities will be built, says Verni. You can also avoid the noise and mess of living amongst a construction site if you buy used, says Lewis.
No. 4: Landscaping and interior featuresA big advantage of existing homes is that they have landscaping already in place, says Lewis. "Friends of mine who bought new were frustrated when they realized that they had to buy every single hook, curtain and blind for their home," says Verni.
Future home values, your timeline for moving and the costs of new and existing homes in your area should all factor into your new-or-used decision.