If you’ve been out house-hunting in Southern California or Washington, you’ve probably noticed that new home builders are pulling out all the stops — and one of the biggest hooks right now is “insanely low interest rates.”
Sounds great, right? Well, it’s worth digging deeper.
These builder incentives are smart marketing — instead of reducing the sales price, builders often use credits to buy down your mortgage rate. That can make yourmonthly payment look great on paper, but here’s the catch:
- Higher property taxes and HOA dues on new construction can erase much of that monthly savings.
- Existing homes often come with lower tax rates and no HOA, making their long-term affordability surprisingly competitive.
- If interest rates fall later, existing homeowners will likely have a better opportunity to refinance and lower their payments further — while those locked into a builder’s promotional rate may have less to gain.
And let’s not forget the hidden costs of new construction — landscaping, window coverings, and upgrades that don’t come standard.
New homes are amazing for many buyers (Bill bought one himself!), but make sure you’re comparing the full financial picture, not just the rate on the flyer.
Bottom line: Don’t be dazzled by the teaser rate. Run the full numbers with a mortgage expert before you sign.