It may sound backwards, but in today’s housing market, a brand-new $350,000 Simmons home could actually have a lower monthly payment than a $330,000 used home. The difference isn't a trick. It isn't about finding a cheaper house, it's about using available dollars more strategically. With up to $20,000 in incentives available from Simmons Homes and financing options through our preferred lender, First United Mortgage, qualified buyers may be able to use those dollars to lower their mortgage interest rate instead of simply lowering the sales price. In one recent example prepared for us by our lender, that strategy lowered the monthly payment by more than $400 and resulted in more than $115,000 in interest savings over the life of a 30-year loan.
That's why we think one of the most important questions for today's homebuyer isn't simply:
“What's the price of the house?”
It's:
“What will this home actually cost me to own?”
When mortgage rates are higher than buyers would like, it's natural to focus heavily on the sales price.
Find a $350,000 home. Negotiate $10,000 or $20,000 off. Celebrate the savings.
And certainly, paying less for a home is a good thing.
But reducing the sales price isn't necessarily the way to make those dollars have the biggest impact on your monthly budget or your long-term cost of homeownership.
That's where buying new can create an opportunity many resale buyers simply don't have.
Simmons Homes currently offers an incentive of up to $20,000 that can be applied in different ways depending on the home, financing program and individual buyer. One of the most powerful options may be using those dollars toward financing to lower the mortgage interest rate.
Here's what that can look like.
Our preferred lender recently prepared this example for us based on a $350,000 home purchase with 5% down.
At a 6.625% interest rate (today's current rates), the calculated monthly payment in her scenario was:
Now take the same $350,000 home and the same 5% down payment, but use the available Simmons Homes incentive toward financing to achieve a 5.125% interest rate in this example.
The calculated payment becomes:
That's a difference of:
$407.75 every month.
That's approximately $4,893 in the first year alone.
But the impact of interest doesn't stop with the monthly payment.
Based on this 30-year loan example, the lower-rate scenario results in:
More than $115,000.
Of course, most homeowners won't necessarily keep the same mortgage for 30 years. They may sell, refinance or pay the loan off early. So the actual lifetime savings will vary.
But the example illustrates something incredibly important:
Rates, APR, costs to obtain a particular rate, loan programs and eligibility change and depend on the individual borrower, so a 5.125% rate isn't a blanket offer to every buyer. That's exactly why we work with a trusted lender partner to look at each buyer's individual situation rather than assuming there's one financing solution for everyone.
Here's where the numbers get even more interesting.
Imagine you've found a used home listed for $350,000.
You negotiate hard and convince the seller to reduce the price by a full $20,000.
That's a significant negotiation.
You're now buying that home for just $330,000.
Using the scenario prepared by First United Mortgage, with 5% down and a 6.625% interest rate, the calculated monthly payment would be:
6.625% interest
$2,572.45 monthly payment
Now let's compare that to buying a brand-new $350,000 Simmons home and putting the available $20,000 incentive toward financing instead of taking $20,000 off the purchase price.
5.125% interest in this example
$2,441.40 monthly payment
Read those numbers again.
The brand-new $350,000 home has a payment that's $131.05 LESS per month than the $330,000 used home.
You're purchasing a home with a sales price that's $20,000 higher, yet in this example, you're paying less each month.
And there's another significant difference.
Compared with financing the original $350,000 purchase at 6.625%, reducing the used home's sales price to $330,000 produces approximately $90,800.48 in lifetime interest savings in this scenario.
Using the incentive toward the lower rate on the new Simmons home produces approximately $115,849.96 in lifetime interest savings.
That's roughly $25,049 more in potential interest savings from strategically using the same $20,000 toward financing rather than simply reducing the sales price.
Same $20,000. Very different result.
The financing comparison is powerful on its own.
But it doesn't tell the whole story.
Because in our example, you're not choosing between two identical homes.
You're comparing a used home with a brand-new Simmons home built for the way families live today.
That means you're starting fresh with new systems, new materials, new finishes and no previous homeowner's years of wear and tear to inherit.
There isn't an aging HVAC system you're wondering whether you'll need to replace in three years. You're not looking at flooring and calculating what it will cost to change it. You're not walking through someone else's kitchen thinking, “We could live with this for a while.”
When you're building your Simmons home, you also have the opportunity to make selections that reflect your style and your life rather than paying to remodel someone else's choices later.
And there are financial benefits that go beyond the mortgage payment.
Simmons Homes builds ENERGY STAR certified homes, which means the home's energy performance isn't simply a marketing claim. ENERGY STAR certified new homes must meet EPA requirements and undergo independent inspection, testing and verification. EPA says ENERGY STAR certified homes are at least 10% more energy efficient than homes built to minimum code requirements and can offer greater comfort, durability and utility savings.
Features such as comprehensive air sealing, properly installed insulation, high-performance windows and efficient heating and cooling systems work together to reduce drafts and temperature swings while reducing the amount of energy needed to operate the home.
Then there's something that's harder to put into a mortgage calculator:
peace of mind.
A new home comes with new components and builder warranty coverage rather than the uncertainty that can accompany older systems. In general, builder warranties on new construction provide specified coverage for workmanship, materials and certain home systems, although the exact terms vary by builder and warranty.
So when you're comparing the cost of new versus used, we think it's worth looking beyond the number on the listing.
Consider the mortgage payment.
Consider utilities.
Consider maintenance.
Consider upcoming repairs and replacements.
Consider the cost of remodeling.
And then consider the value of simply moving into a home that was designed and built for your life now.
After seeing these numbers, it would be easy for us to say:
Always use the incentive to lower your rate.
But that's not how we approach it.
Because every buyer is different.
Maybe your biggest priority is achieving the lowest possible monthly payment.
Maybe you have plenty of monthly income, but keeping more cash in your savings account after closing is important to you.
Maybe financing isn't your biggest concern, and you'd rather put available incentive dollars toward options that make your new home work better for your family.
Or perhaps you've fallen in love with one of our completed quick move-in homes. Because the design selections and options have already been added to those homes, there may be opportunities to apply an available incentive differently, including toward the home's price when applicable.
There isn't one right answer for every buyer.
There is a right answer for you.
Buying a home shouldn't feel like solving a mortgage puzzle by yourself.
When you find a Simmons home or community that feels right, our job isn't simply to hand you a price sheet.
We want to understand what matters to you.
What monthly payment feels comfortable?
How much do you want to bring to closing?
Do you have a home to sell?
Is keeping cash in savings important?
Are there design options that would make a meaningful difference in how your family lives in the home?
Would your available incentive have a greater impact reducing your interest rate, helping with closing costs, adding options—or being applied another way?
Then we can sit down with our lender team and look at the possibilities.
Sometimes the solution may be obvious.
Other times, that's where a little financial creativity behind the scenes can make a big difference.
Rather than asking you to compromise on the neighborhood you want, the floor plan that works for your family or the quality of the home just to reach a particular sales price, we can explore whether there's a smarter way to structure the purchase.
Because ultimately, we're not trying to help you buy the cheapest house.
We're trying to help you find the home that fits your life - and then determine the smartest way to make the numbers fit, too.
If you've been shopping resale because you assume a new home will cost more, don't rule out new construction based on the sales price alone.
Bring us your budget.
Bring us the payment you're trying to reach.
Bring us the house you're comparing ours against.
Then let's run the numbers.
You may discover that the brand-new home you thought was out of reach could actually cost you less each month than the lower-priced used home you were considering.
And that's before you factor in the benefits of owning a brand-new, ENERGY STAR certified home designed around the way you actually want to live.
Find the home that fits your life. Then let us help make the numbers fit, too.
Financing Example Disclaimer: Examples are for illustrative purposes and are based on scenarios provided by our preferred lender using a 30-year loan and 5% down. Payment figures may include items beyond principal and interest based on the lender's assumptions. Interest rates, APR, discount points, incentive availability, closing costs, loan programs, qualification requirements and actual payments vary by borrower and market conditions and are subject to change. The 5.125% rate shown is an example of a rate achieved using available incentive funds toward financing and is not a guarantee of rate or terms. Lifetime interest savings assume the applicable loan is held for its full term. Buyers should consult First United Mortgage for current rates, APR, eligibility, complete loan assumptions and disclosures. $20,000 Incentive available for a limited time. Subject to change without notice.
