Springfield Home Buyer's Guide Tip of the Month Missouri

What to Look for in the Home

Make a list of things you really like about where you are living now or have lived in the past. Then list things you really dislike. Then write down what you would ideally like to have in your home.

Size? If you select something small, will you quickly outgrow it? Could you quickly and easily resell the house? Or would it make a good rental? Or a good vacation home for you?

New or Resale? There are distinct advantages and disadvantages to each, and it is all up to your individual needs and tastes.

Older homes tend to have larger yards, more square footage, are closer in to the center of town and have more character. Often the construction is better although not always. Property taxes on an older home may be less than on a comparable new home, and they rise slower than in a new community. With the older home, there is more of an opportunity to roll up your sleeves and get involved with home remodeling and build "sweat equity."

Still there are some disadvantages to buying an older home. The design and floor plan may be functionally obsolete. Repairs and remodeling can become a cash drain. A thorough home inspection is critical to detect any structural repairs. Know what you are getting yourself into before you take the plunge. Here are some considerations:

  • Are repairs necessary to make the house livable?
  • Can you live in the house while the work is being done?
  • Should repair and remodeling costs be included in the mortgage or should you keep them in a separate home improvement or construction loan?*
  • Is the property sound enough to make the project worthwhile?
  • What type of special permits/approvals are required? (This is especially important for older historically preserved homes).

If you plan to do major remodeling immediately upon buying the home, your first mortgage lender may agree to lend you the remodeling money in with the first mortgage. However, it is more likely you would take out a second mortgage or home equity loan for big projects. These loans both have a higher interest rate than a first mortgage. The Federal Housing Administration (FHA) has a 203(k) program that is for remodeling, and since 1993 the Federal National Mortgage Association (Fannie Mac) has offered HomeStyle, a program for renovation. You may be able to find a local lender who will participate.

Also the operating and maintenance of an older home is higher. A 1991 study by the National Association of Home Builders shows it costs nearly four times as much to run a 30-year-old house as to run one built after 1990.

On average, an older home costs $4,384 a year per $100,000 of value; a newer one costs just $1,874 a year. To find out how much a home will cost to run, ask to see utility and repair bills for the past three years.

A new home will have the latest technology, more efficient heating and air conditioning systems, better insulation, adequate closet space, and the latest floor plan. Decorating expenses will be small because new homes come with carpeting, wallpaper, paint colors, and lighting fixture you selected.

If well-built (not always a good assumption) maintenance and repair should be low and predictable. Additionally, new construction often has great financing programs, and builders are more likely than individual sellers to pay your closing costs.

However, probably you will be farther away from the heart of town, surrounded by identical houses, and barren surroundings until everyone's lawns grow in.

If selecting a new home, check the reputation of the builder thoroughly. Visit with homeowners in the new construction community. How quickly are repairs being taken care of? Are they being done well?

Also, be aware of the model homes; they are full of upgrades that can run your total sales price up another 6% to 8%, and it is often difficult to recover those costs in a subsequent sale. Try to find the same model in "production" and see how it feels to you without the mirrors and small scale furniture.

Just a tip: if you buy a new home, be sure to make frequent trips to the home site (at least weekly) to check on its progress. It is easier to redo something discovered at its beginning stages rather than waiting until the house is near completion.