Should you buy or build your new home?
To build or not to build? That is the question. If you’re in the market for a new home, you’ve probably started thinking about whether you’d like to buy an existing home or dive into a new home construction project. This decision includes multiple factors, including convenience, cost, and customizable features, and how important each of those may be. While both the buy & build options have their pros and cons, there’s no denying that obtaining a brand new (or new-to-you) home in any capacity is an exciting step!
The good news: Our experienced loan officers have helped hundreds of borrowers through the same decision process and are equipped to answer any questions you may have about financing your purchase or construction.
The Benefits of Building
Building a new home from the ground up offers a lot of benefits, the most apparent of which is the ability to customize nearly every aspect. Depending on your budget, you may not need to settle for features, though some plans include standard items. But obviously, from layout to flooring and everything in between, you’re able to make choices that accommodate the needs of you and your family.
Modern finishes and features can be also be integrated into your new home construction project, including the utilization of energy-efficient materials like upgraded insulation, which can decrease the cost of your utility bill. New home construction often avoids issues plaguing already existing homes, including problems like asbestos, lead paint, mold and more. As the first owner of your new home, you’ll get a fresh start!
While upfront costs for building may be higher than purchasing an existing home, these expenses can often even out over time when you take into consideration the money you’ll be saving on utility bills and repair/renovation costs. New home construction can feature the most up-to-date and cutting-edge technology, minimizing the maintenance required. The return on investment can be significant when it comes time to sell, since newer homes are typically more appealing than older ones.
Lastly, new home construction can reduce the stress associated with searching the market for an existing home. According to the April 2019 Realtors Confidence Index Survey, existing properties are on the market for just 24 days on average. The high-paced speed of purchasing a home amongst an unknown amount of competition can be stressful; building a house, on the other hand, significantly decreases the competition factor.
Learn more about our new home construction loans.
The Cons of Building
While there are a number of benefits with a new home construction project, there are can be some disadvantages. First of all, the timeline for a new build is 6-9 months. A move into an existing home within 30-60 days after your offer is accepted – allowing for financing, inspections, appraisal and loan approval.
There can be room for price negotiation when purchasing an existing home (less likely in the current seller’s market), new construction contracts are more rigid. Beware of hidden costs, including temporary housing during construction, upgrades, change orders after contract signing (especially if they are done in the middle of the project) and post-move costs, like landscaping and driveway.
The Benefits of Buying
Buying an existing home can be a satisfying and rewarding process, especially when you find a house that fits your needs and feels like home. When deciding if purchasing an existing home is right for you, it’s important to remember that cost and convenience are two huge benefits when purchasing something that’s already built.
The convenience of buying an already existing home is apparent when, after closing, you can begin to move in immediately. The home is yours, and it’s ready for you! In addition, with a qualified realtor and mortgage finance lender like Great Midwest Bank, the home buying process can be streamlined and and stress-free. Patience is key, as some improvements may need to wait until after you’re moved in.
Buying a house can take the stress out of making multiple decisions with new home construction regarding layout, fixtures, design, etc. Building a home requires more of your precious time to attend to all the details. When you buy an existing house, however, you can upgrade, renovate and modify at your own pace; there is less pressure to make decisions on a deadline.
Learn more about our home mortgage loans.
The Cons of Buying
While buying may offer a more transparent timeline and budget, be aware of potential bumps in the road. Unforeseen maintenance issues can take a toll on your morale and wallet. A good inspector is important to offer perspective on what may lie ahead. Major issues like a roof, basement or foundation issue may be addressed prior to closing, but other costs may have to be considered in your first few years of home ownership.
Cosmetic updates are a different story. Again, be patient and look past the features you may not appreciate knowing you can address them later. If the home you’re looking to purchase is older, you may end up needing to update features such as flooring, wallpaper, and appliances. You may, however, be able to leverage these factors into paying less for the house itself. Last, existing and older homes can be inefficient, leading to higher utility costs. Consider the expense of a new furnace or air conditioner before extreme temperatures leave you in a panic.
Consider a Major Home Renovation
If you love your location and home, but would like a few upgrades, a home renovation loan may be the perfect compromise! A renovation loan can keep you right where you are without displacing you and your family during construction. Remodeling negates the need for realtor commissions and moving costs.
Your home renovation plan can include adding features that your current home doesn’t include, and can meet your specific qualifications. Meet your needs with a renovation loan.
Learn more about our home renovation loans.
Now that you’ve taken some of the pros and cons of both building and buying into consideration, it’s time to stop into your local Great Midwest Bank to talk to our experienced loan officers about our custom mortgage products and home construction loans.