hat will it be, that new house with the perfect family room or that cute colonial with its charm and unique detail? At first blush, the decision whether to buy a new or existing house seems solely a matter of taste and temperament.

But there are hard-core financial considerations that enter the picture. What's more, the economics change depending on the location of the home, its floor plan and even who designed or built it. In making your move, you'll need to balance the purchase price against the cost of upkeep and the final payoff when you sell.

In general, an existing home is cheaper to buy than a new home of comparable size and neighborhood. But the new home will be cheaper to maintain and fetch more at resale. Let's review the options, beginning with my recommendation that if you want the best deal, you'll come out ahead buying a relatively new existing home. Then we'll go through the pros and cons of new vs. older homes.

The best overall buy is usually an existing home that's less than seven or eight years old. The prices of new homes are several thousand dollars higher than these relatively new homes even though there may be little or no difference in floor plans, neighborhoods and amenities. A five-year-old home of equal square footage can cost an average of 15 percent less than a brand new home. In areas where the cost of residential construction has exceeded the norm, price disparity is even greater, even in the same neighborhood.

For example, according to Marshall & Swift, a division of McGraw Hill, Indiana had the largest annual increase in construction costs, 7.9 percent. This translates into major price differences among houses with only a few years between them in age.

If you do buy a nearly new home, be sure that you get the benefits of lower maintenance costs. The roof should still be under warranty and the electrical system and central air conditioning systems should be up to code. Meanwhile, you don't have all of the peripheral costs associated with new homes such as landscaping, new appliances and window treatments.

For most buyers, the biggest barrier to making a financially rational choice is the floor plan. Brand new homes have high ceilings, large rooms, great rooms, outdoor rooms and/or family kitchens. Existing houses, even ones less than 5 years old, can seem tiny because the rooms are so much smaller by comparison. Check the square footage. The older home may be bigger but may not seem so. Check the retaining walls and structural beams. You may have the space to make inexpensive changes that create a modern look by simply knocking out a couple of walls.

A newer home brings up different issues. Construction costs can sometimes run way over your budget unless you're willing to forego expensive features and unnecessary upgrades in exchange for the features you really want.

Even if you keep your costs in check, houses that run 10 percent over budget are the norm. Even already-built homes can give you options that bust the bankroll. Yards are typically smaller and new homes often require additional spending on landscaping, furniture, draperies and countless little incidentals. The good news is that builders sometimes offer special incentives to attract buyers, such as paying the closing costs.

Buying early also helps. New homes usually become progressively more expensive as the development takes hold. The best buys are the first half dozen, when upgrades and price reductions can be negotiated. As the homes are sold, the developer will increase the price at each phase.

Logically, a new house should have the strongest structure and state of the art systems. But not always. Poor construction, flimsy materials and new house settling can be more aggravating and costly than in older homes. To be sure you don't buy a maintenance headache, check warranties on everything, including individual appliances, structures and roofing, electrical, heating and cooling systems.

Tax assessments on homes in new developments are unpredictable. At first, taxes may equal a percentage of the cost of a home. In Nevada, one of the fastest developing areas, your annual tax will likely be 2 percent of the home's value. But, these initial assessments may change as the development matures and as water and other services expand into the area. Visit the county tax assessor's office before you sign a contract and see what assessment plans have been made.

Services, including garbage collection and mail delivery, are a critical part of the survival of any development. If you buy a new home, check the local departments that are in charge of these services to be sure that the developer has made adequate provisions.

If you're attracted to an older home and you plan to stay put for a while, you must make sure that the ongoing costs are as low as possible. Doing so is a matter of research and inspection. Overall maintenance costs are a function of the house's condition. These are the main areas in order of what they can cost you to fix or improve: structural problems such as replacing a roof; a new heating system, electrical system, plumbing and appliances.

From a maintenance point of view, houses built after World War II are considered modern. In fact, their plumbing and heating systems won't vary much from those we'll see in the millennium.

Pre-war housing is completely different. A bargain to buy can be a nightmare to maintain. Turn-of-the-century homes aren't wired properly to handle computers, hair dryers and lights operating at the same time. Look for 100-amp outlets at a minimum; 220-amp if you plan to use an electric stove. Outlets should be spaced every 12 feet.

Regardless of the age of the house, how can you tell what you're getting into? Inspect the house. Older homes should have copper plumbing, a compact furnace, and where possible, central air.

They won't have in-ground sprinklers and storm windows, but you can live with that. You can't accept worn gutters and leaders, a bad roof or a faulty electrical system. The water pressure is a different issue. A full plumbing job is too expensive, unless the house is sold dirt-cheap. But you can learn not to take a shower and wash dishes at the same time.

The good news is that existing homes typically are closer to cities in urban areas, often offer larger yards and may have amenities that might be cost-prohibitive for you today.

When the time comes to move, appreciation will depend on location more than any other factor. Age and even the appearance of a home are far distant determinants. But given the same neighborhood, the house with the more up-to-date features and lowest maintenance will win out.

You can achieve that with your own continuous diligence and good taste. Buy what you love in the best location you can afford. The money will follow.