My Sister Just Bought A Newly Built Home: The Good and The Bad

My sister just bought the newly built home three weeks ago. I know that she always wanted to buy a new one so she has flexibility when making customization on the house.

So this past weekend, my nieces and nephew stayed in our apartment so that my sister and her husband have some breathing room as they try to shop around looking for furniture for their new home.

It’s good that I have an extra day-off so the kids were able to stay through Monday and we dropped them off afterwards. Our company offers alternative schedule  and I’m off from work every other Monday.

Before they bought the house, they were renting a two-bedroom & 1-bath apartment for $1,275 per month.  Their lease contract with the apartment was about to expire so they were looking for a place to move. Instead of looking for another apartment, my sister decided to look around for a house.

At first, they started looking in the same area close to their former apartment but the costs of the homes are pretty expensive.  So my sister decided to look further east since houses are much more affordable in those areas. Not only that the houses are cheaper, they are newly built and much bigger.

In our area, the farther it is from Los Angeles, the more affordable the prices are. Besides, the family really do not need to live closer to Los Angeles since her husband works in the County 70 miles east of downtown Los Angeles. The commute to work is against the flow of rush hour traffic.

Most of the affordable houses are in San Bernardino and Riverside County. They found a newly built home in San Bernardino County and the cost is only $215,000 for a 5-bedroom 3-bath home sitting on a 7,500 sq ft lot. My brother-in-law works in Riverside County, so there is really no difference in commute time and distance.

Why It’s A Good Move

Monthly Payment (PITI) is almost the same as the rent

The monthly PITI on the new home is only $1,400, compared that from their old apartment at $1,275. For $125 more, they got a much bigger space and they can call it their own. Of course, they also need to factor in the true cost of home ownership but since the house is brand new, repairs and maintenance for a few years should be minimal. Besides the feeling of home ownership beats the small additional cost in their case.

No out-of-pocket-cost

Believe it or not, there is no out-of-pocket cost for my sister. She said that it felt as they have just moved into an apartment when it comes to the move-in cost.

• They qualified for the zero down loan offered by the FHA with a very good mortgage rate!
• The builder paid for the closing cost.
• They also received $5,000 down payment assistance from the city that they used towards reducing the principal.
• Because the home is one of the last homes, the builder offered free upgrade incentives on the flooring. My sister was able to take advantage of the free tile flooring upgrades on the living room, dining room and kitchen.

No Mello Roos and HOA

In Los Angeles, most of the new homes are built in a gated community where they either charge mello roos or home owner’s association (HOA). On her new home, my sister does not have to pay any HOA or mello roos and these could be a big deal in the home purchase because it presents additional cost on top of the monthly payment.

Better School District

Fortunately, the new home is located in a very good school district. The school’s performance has been ranked as one of the better ones in the State of California. And as you know, this is one of the key factors that you should consider when buying a house. Unless, of course, you can afford to send the kids to private schools.

The Cons

Too far from Los Angeles and the Beaches

It is now much farther from the tourist attraction of Los Angeles, Hollywood, and nice beaches that kids usually enjoy to visit. Disneyland, Universal Studios, Knott’s Berry Farm, and all the famous California beaches are all at least 70 miles away. But it should not be a problem since they only visit occasionally.

Too far from close relatives

One of the reasons that they stayed in the apartment for around three years is that it is much closer to us. My mom’s residence is only 12 miles, my other brother is only 18 miles away and we are only 35 miles away. Now, you have to add 45 more miles from what it used to be.

Climate is too extreme

It is much hotter during summer time and much cooler during winter when compared to the weather conditions in Los Angeles. From what I know, it sometimes  snows during the winter and local officials usually shut down the roads when it is extremely dangerous to drive. But this does not happen often as compared to other areas (like the east coast) so I don’t see it as a serious problem. This is just what my other friends who lived there told us.

Traffic Jam in the freeway during the holiday

The home is located in the vicinity of the Interstate 15 freeway, which is the way to Las Vegas. Usually, traffic is always bad during the holiday.