Buying a brand new home can be a daunting and exciting experience. There are so many unknowns that come along with buying your first home. However, there are many benefits to buying a new home, even if you’re not ready to commit to being a homeowner.
New homeowners will enjoy all the perks of living in an established neighborhood. Your new home will also help you save money and lock in long-term mortgage rates over the course of time.
Here are some of the top benefits of buying a brand-new home:
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1. New Construction Finishes
Investing in a new home means getting all the benefits of new construction. This means you’ll get a home that will last you a long time. That’s because newer homes are built with more durable materials and have more efficient construction techniques, resulting in less wear and tear and a longer lifespan for your home.
New construction also means you’ll be able to choose from various exterior finishes, including brick, stone, cedar shakes, siding, and more. Depending on your local housing market and preferences, you may also be able to choose from various exterior colors, more than most older homes.
2. You’ll Get Tax Benefits
Buying a brand new home means you’ll be able to take advantage of tax benefits, including the Mortgage Interest Deduction (MID), Mortgage Interest Sub deduction (MIS), and the Home Sale Tax Deduction (HSWD).
The MID reduces the amount of interest you pay on your mortgage (between 10% and 30%), depending on your income. The HSWD, also known as the home sale tax deduction, reduces the amount of taxes you pay when you sell your home. However, you can’t claim the HSWD on cash sales.
3. New Home Warranty
Every new home comes with a warranty that protects the home’s major components for up to 10 years. The warranty can be renewed for up to 25 years and covers the following:
- Water intrusion
- Structural problems
4. A New Home is a Financial Investment
When you move into your first home, you might feel like you’re spending a lot of money. The truth is, you’re making a financial investment for the future. After all, buying a house is probably the largest tangible purchase most people will make in their lifetime.
5. Lock in Long-term Interest Rates
The Federal Housing Administration (FHA) requires that new mortgage loans have a minimum mortgage insurance premium of 1.75%. This premium is based on a loan amount of $299,500, which is the typical home price in the U.S. today.
Mortgage insurance protects the lenders if your home value decreases or you default on your loan. You can pay off your mortgage before the 10-year mark to avoid paying the full amount of mortgage insurance.
It’s important to note that you can’t take out a new mortgage loan if you have a preexisting mortgage loan.
Buying a brand-new home can be exciting in light of the benefits listed above. However, you want to ensure you invest your money wisely and get the most out of your purchase.
That said, investing doesn’t have to be equally scary or even soulless. In fact, investing in your new home can increase your property’s resale value down the road if you do it the right way.
Hopefully, the benefits listed are compelling enough to convince you to invest in a new home.