Buying a brand new home often costs more than purchasing an older property. In some cases, you might justify the extra expense of new construction based on the assumption that you aren’t going to need a lot of money for maintenance and repairs since the property is new.
Unfortunately, things don’t always work out that way — and you could end up with repair costs sooner than you think. Here’s what you should know.
6 Simple Tips to Secure a 1.75% Mortgage Rate
Secure access to The Ascent’s free guide that reveals how to get the lowest mortgage rate for your new home purchase or when refinancing. Rates are still at multi-decade lows so take action today to avoid missing out.
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time.
Please read our Privacy Statement and Terms & Conditions.
Don’t count on not incurring costs in a new home
When you buy a new construction home, it usually comes with a builder’s warranty for the first year or so. That can give you a false sense of confidence that you won’t need to spend any money on your home. But even with a comprehensive builder’s guarantee, there will be maintenance expenses for the property.
If you’ve never owned a home before, you may be surprised at all of the monthly costs that you’ll have with a house, even if it is new construction and hasn’t been lived in before. For example, you’ll need to have the gutters cleaned, or you’ll need to buy equipment to clean them yourself (and be prepared to climb up on your roof). And you may also need snow removal service or lawn care — or both.
The home itself will also need some regular maintenance, such as changing water filters, adding chemicals to a water softener if you have one, and changing HVAC filters. The costs of this routine maintenance can add up quickly, especially if you’ve stretched your budget to buy a home, taken out a large mortgage, and weren’t prepared for maintenance expenses.
You may end up doing home repairs sooner than anticipated too, because you can’t assume all the components of a new home are going to work perfectly for a long time. Your builder’s warranty and manufacturer’s warranties are generally good for a year or two at most, and things may start going wrong soon after those warranties expire.
I know from firsthand experience that just because items are new doesn’t mean they’ll work flawlessly forever. In fact, my husband and I bought a brand new home but our disposal broke after about a year — shortly after the warranty ended.
We also needed a new compressor part for our heating system in year three. And a dishwasher drain clogged, which needed a repair call that wasn’t covered by our warranty because it was a wear-and-tear issue. These are just a few examples of the many expenses we incurred to fix our home within the first few years, even though it was a new construction house purchased from a reliable builder.
If you’re anticipating that a new house will be trouble free for a long time, these maintenance and repair costs could come as a surprise — and you could end up in debt if you aren’t prepared. So make sure that before you buy a new build, you have a plan to start a home maintenance fund in a savings account so you can cover the costs you’ll inevitably incur during the first few years after moving in.
View more information: https://www.fool.com/the-ascent/mortgages/articles/buying-a-brand-new-home-maintenance-may-cost-more-than-you-think/