The Big Move: I’m a widow, and want to move from Chicago to a warmer climate. But most of the homes I’ve found need a lot of work. Are there any cons to buying a new house?

But most of the homes in the price range that I’m looking for need work. So my question is: Should I buy a new home, or should I go for the existing home that needs work? 

I’m a senior, and I want to leave my children something. But I’m daunted by the process ahead of me. 

Signed,

Feeling Anxious and Overwhelmed

‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.

Dear Anxious and Overwhelmed,

I am so sorry for your loss. I hope you are getting the support you need during this tough time.

Regarding your question, do the math and see which makes more financial sense. With the maintenance and repair work involved, does the total cost add up to be less than the cost of a new construction, and ongoing maintenance? 

First off, a note: If you list your home at $265,000, it may not fetch that price given how high mortgage rates are right now, and the rising number of unwilling buyers in this market. So temper your expectations.

So let’s say you can comfortably afford an existing home at $250,000, factoring in for future repair/remodel expenses.

Remember, mortgage rates are pretty high — so that shaves more off your budget. But you also are planning on taking out a VA loan, which is a benefit: VA loans have a lower mortgage rate, plus there is no down-payment requirement, and your mortgages are “assumable” — a potential big perk for whoever buys your home.

With an assumable mortgage, the buyer gets ownership of the house and takes over the seller’s home loan, too. As NerdWallet columnist Holden Lewis recently pointed out on MarketWatch: “Picture yourself trying to buy a house when mortgage rates are in the double digits. You find a home seller who has an assumable loan with an interest rate in the single digits. That home may be affordable if you can take over the loan; it might not be affordable at a double-digit interest rate.”

So you say you want to move to “somewhere warmer” within that price range. You also want a 3-bedroom ranch. What can you afford? 

Looking at the available inventory of existing-homes on the market, you have some options.

According to Zillow, for a 3-bedroom house under $250,000 in S.C., you have less than 1,000 options to choose from.

Keep in mind: The median amount homeowners spend on renovation projects was $18,000 in 2021, according to a recent study by home-remodeling site Houzz. You may need less, or more, depending on the state of the house. Include that in your budget. 

In most cases, yes, new builds are less work in terms of maintenance and repair. But they’re also more expensive overall.

“Buydowns and other incentives that builders may offer can make buying a new construction home less expensive. But finding that home is a tall task,” Nicole Bachuad, senior economist at Zillow
Z,
+2.14%,
told MarketWatch. (Buydowns generally occur when a buyer aims to get a lower interest rate for the first few years of a mortgage.)

“New construction homes are generally listed at a premium, focusing at the higher end of the market. Buyers who are looking for entry-level homes will have a difficult time finding a deal that works within their budget with new construction,” Bachuad added.

Create a budget, and factor in the price of the home you want to buy, your potential mortgage rate, taxes and fees and such, and get estimates or quotes on what it would cost to fix up a home in your price range. Afterwards, tour some new builds and see what offers they have that bring the price of a new home into your price range. See which is cheaper.

Builders may sometimes work with you to see what arrangements could work. When I visited a new construction site in San Jose, Calif., a few weeks ago, I learned that one of the staff suggested the (future) owner get a roommate for a short while to make the home more affordable. 

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