Various color houses

What Kind of Home Should I Buy?

Feb 20, 2020
Empower Insights

The right home for you depends on your priorities, your personality and your skills. Use this quiz to plan your purchase.

Do you want an old house or a new house?

Are you handy with repairs and aiming for a one-of-a-kind home? Consider a classic.

Old homes are often loaded with character, such as hardwood floors, and the neighborhoods have mature trees. Plus they’re usually closer to city centers, which means shorter commutes.

But that charm can also mean smaller rooms, dated appliances and layouts that don’t match modern lifestyles (think sunken living rooms). If you plan to remodel, get estimates first; it can cost more than you imagine. And be sure to examine utility bills: Old homes can suck energy.

Want energy savings and no worries? A new home may be your style.

A new house can have snazzy appliances and features, and you can often customize to suit. It will also generally better meet modern energy standards, including airtight double-pane windows. (Starting in 2020, most new homes in California will be required to have solar electric.)

Generally, new houses come with a warranty, which might cover breakdowns on parts like the furnace and garage doors for five years, and up to 20 years for major structural damage like a cracked foundation. If these are concerns, you may want to look a closer at energy savings and maintenance costs when considering what kind of home you should buy.

Do you want a whole house, or a condo or townhouse?

Is your home your castle? Check out houses.

Unlike a condominium and some townhouses, a house is all yours — there’s no one else to consult over changes and repairs, and no loud neighbors across the common wall.

But even your own home will come with some restrictions. Many towns regulate everything from exterior lighting to where you can park a trailer.

Do you love hanging with your neighbors? A condo or townhouse is right up your alley.

Condos and townhouses put you in with a crowd—and that’s a good thing if you’re the neighborly type. With a condo, the common space outside is maintained by the homeowners association, to which you pay a monthly fee. And since townhouses are urban by definition, they have less open space to maintain. So you can spend more time socializing around your new kitchen island instead of mowing the lawn.

Townhouses are urban by definition

Do you want a big box or a jewel box?

Planning to stay put and raise a family? Bigger could be better.

A big house can accommodate a growing family — so you won’t need to move again — with more space for guests and entertaining. But you’ll probably pay higher mortgage, tax and energy bills.

Are you cool with cozy, and hoping to save on energy? Less can be more.

A small house may be more economical, but that doesn’t mean you need to cramp your style: The money you save by going small can be invested in quality upgrades, like gourmet kitchen appliances and designer furnishings.

Whatever kind of home you buy, experts recommend keeping your housing costs — mortgage, taxes, utilities, maintenance and condo fees — to no more than 28 % of your family’s gross income.For more on determining how much house you can afford take a look at Personal Capital's article on Understanding PITI and Mortgage Payments.

Build a foundation for your future with an Empower Investment Account

1 thebalance.com/how-much-home-can-you-afford-mortgage-rule-of-thumb-1289846, as of February 2020

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