Prospective home buyers have the choice of two types of houses on the market: resale or new. Home buyers planning to buy a brand-new house or condominium often cite energy-efficiency, open layout, a warranty, and being able to select appliances, flooring, paint colors and other design elements as factors driving their choice. But builders say that buyers can be drawn to a new house for reasons that aren’t so obvious. Below are a few more benefits of a brand-new home that you may not see in the sales brochure.

Building a Community Together

A brand-new community is one of the built-in benefits of many new homes. When families move in to a subdivision at the same time, often lasting bonds of friendship and neighborliness are formed right away. Nobody is the “new kid on the block,” and many home builders host community block parties in new developments to help owners meet and connect. Popular amenities like pools, walking trails and courts for tennis and basketball offer additional opportunities for interaction among neighbors of all ages. Often new communities are comprised of home owners in the same stage of life, such as young families or active retirees, so neighbors can get to know each other through carpools, PTA meetings, tennis matches or golf games.

Entertaining

Throwing a party in an older home can be a challenge because smaller, distinct rooms make it difficult to entertain guests in one large space. Builders are responding to today’s home buyer preferences with layouts featuring more open spaces and rooms that flow into each other more easily, like the popular great room. While you are in the kitchen preparing dinner, you can still interact with guests enjoying conversation in the family room without feeling closed off. The feeling of spaciousness in today’s new-home layouts often is enhanced the higher ceilings and additional windows that bringing in more light than you would find in an older home.

A Clean Slate

For some buyers, parking the car in a sparkling-clean garage or being the first to cook a dinner in a brand-new kitchen is part of the appeal of new construction. In addition, you won’t have to spend time stripping dated wallpaper or repainting to suit your own sense of style. You can create your own home décor from the get-go! The advantages of being the first owner of a home extend to the outdoors. Instead of inheriting inconveniently or precariously placed trees, or having to tear up overgrown shrubs, you can design and plant the lawn and garden you want.

Outlets, Outlets Everywhere!

Homes built in the 1960’s and earlier were wired much differently than houses today. Builders had no way of anticipating the invention of high-definition televisions, DVRs and computers that we enjoy today — and the very different electrical requirements they would introduce. New homes can accommodate advanced technologies like structured wiring, security systems and sophisticated lighting plans, and can be tailored to meet the individual home owner’s needs. Anyone who has ever lived in an older home can also attest to the fact that there are never enough outlets, inside or out! New-home builders plan for the increased number and type of electronics and appliances used by today’s families, so you can safely operate a wine cooler, Christmas lights or your computer.

Many customers don’t realize that closing costs are negotiable, mortgage experts tell The New York Times.

“There’s a lot of room for negotiation in the costs of closing and consumers should examine every charge and not hesitate to challenge them and try to bring them down,” says Barry Zigas, director of housing policy at the Consumer Federation of America.

Closing costs can really add up when buying or refinancing, running anywhere from 3 to 6 percent of the price of the property. For example, in 2010 the average closing costs for a $200,000 purchase rose nearly 37 percent to $3,741, according to Bankrate.com.

Many of the fees associated with closing are negotiable and consumers should review line-by-line estimates and challenge them.

Simply ask the lender which fees are negotiable and which are fixed to find out where there’s wiggle room. Questions such as “Who is getting paid this fee, and why am I being asked to pay it?” can start the conversation, experts say.
“It’s not a time to be polite,” says Kathleen Day, a spokeswoman for the Center for Responsible Lending. “You have to have a strong stomach and a stiff spine and not bow to pressure from the other side of the table to close the deal.”

Lenders are required within three days of receiving a loan application to provide an estimate of closing costs for buying or refinancing a home. Good-faith-estimate forms provided by lenders can be used to easily compare closing costs among lenders in shopping around for the best deal too.

Source: “Curbing Close Costs,” The New York Times (Jan. 27, 2011)

Borrowers with Fannie Mae-backed loans will face higher borrowing costs and interest rates, even if they have a perfect credit score, starting on April 1.

The agency is imposing a “loan-level price adjustment” on several mortgages, in which borrowers will be charged more in cost or higher interest rate based on how much down payment — or if they’re refinancing the amount of equity in their home — as well as their credit score, explains mortgage expert Bill Gassett in the Massachusetts Real Estate News.

Prior to the adjustment, a buyer with a 700 credit score and a $160,000 mortgage who was purchasing a $200,000 home may pay an additional $800 in these fees. That cost would now be doubled: The loan’s risk-based pricing would equal $1,600, said Cameron Findlay, chief economist for LendingTree.

Borrowers who don’t have large down payments or who have low credit scores will see higher rates. But even borrowers with good credit scores will have to pay more too.

For example, Gassett explains that a buyer with a credit score over 740 who has a 25 percent or lower down payment will now pay about 0.125 percent more in rate.

For any buyer or refinancers of a condo (excluding detached condos) who have less than a 25 percent down payment will face an increase in rate of nearly 0.5 percent.

“It certainly says that even with a great credit score, they still see some risk in you,” Findlay told The Wall Street Journal.

Some lenders have already started incorporating the higher fees.

Not all loans will be subjected to the fees, experts note. For example, not all lenders sell all mortgages to the secondary market and loans insured by the Federal Housing Administration also will be immune.

Source: “Fannie Mae Mortgage Interest Rates & Costs Rising,” Massachusetts Real Estate News (Jan. 30, 2011) and “Mortgage Fees on the Rise Again,” The Wall Street Journal (Jan. 25, 2011)