Tips for the First Time Home Buyer: Older Home vs. Newer Home

First time home buyers may already have an idea of whether they would like a newer home or an older home. While personal preference has a lot to do with this decision, there are also practical and financial issues at play to be aware of. 

Advantages of a New Home

Those home buyers who want newer homes usually look for the upgrades and efficiency a new home can offer. The key benefits of purchasing a new or relatively new home include:

Lower maintenance fees - New homes have more than just new appliances or modern architecture. They also have upgraded systems such as newer plumbing, more efficient heating and cooling features and more sound foundations. New homes are built to new standards and have new parts. On the whole, it costs less to maintain a new home than an old home.

Less chance of major repairs - When you have an inspection on a new home, you are not likely to find very many "red flags" or major repairs. Old homes, on the other hand, are likely to have many expensive needs. For example, replacing a roof or repairing a crack in the foundation is not likely to be necessary on a home for at least 10 years.

Cheaper to insure - Because your new home is built with new parts and to modern standards, insurance companies will charge you less in premiums. Homes with lower costs of upkeep and less chance for major repairs are cheaper for them to insure.

Advantages of an Older Home

Older homes can be much more expensive to own, but they have several key advantages over newer homes that still make them an attractive option.

Lower asking prices - Homes that need any type of rehabilitation or upgrade will reflect this need in the purchase price. Instead of paying for a fully-upgraded kitchen and hardwood floors, for example, you will only be paying for an outdated kitchen and carpeting. While there are some flaws or design mishaps that may turn you off the property, most of the changes older homes require can be made relatively easily.

Greater potential return on investment - If you do choose to make the changes you see necessary in an older property, there is a greater potential return on investment. You have to be smart with your choices, spending appropriate amounts and making wise changes. There is simply less room for improvements on a new home, though, which means you will not be able to generate as large a return.

Grow with the home - Instead of buying a home that is move-in ready, you have the option to grow with your home. This means you can pay less up front for the purchase of the property and then put more money in as you have more income to spend. Your family will be able to afford a larger house if you are willing to compromise a bit on upgrades on the front-end.

Value in period homes - Getting your hands on a period or historic home can give you a lasting asset. You should aim to keep historic homes true to their style, but you can improve mechanics and other features along the way.