Building Your Own Home: Advantages And Disadvantages
If you're in the market for a new home, you probably wonder what is better: buying a home already built and lived in, or opting for new construction? There are pros and cons to each decision, and you should review them to know which option is the best for your finances.
Building a new home has some advantages. The two most important advantages include:
- The ability to customize the finishes and layout. This is the clearest advantages. A pre-existing home can limit you in the floorplan, especially if you are not prepared to undergo an extensive renovation.
- Everything will be new. There are no hidden disadvantages in newer homes, and many new homes come with a builder's warranty for the first few years which can help cover shoddy construction or "lemon" products.
However, the disadvantages are many. Some things to consider are:
- how difficult it is to stay in your budget. Building new means paying for everything, including things that you might not have thought about, like window treatments or upgrades to cabinets. Customizing things exactly the way you want them comes at a price, and even though an extra dollar per square foot of flooring might not seem like a lot, it's easy to "nickel and dime" your way to being thousands of dollars above your initial estimate.
- getting financing. In some cases, it is easy to "build" a house in a development where the house is not yet built, but the floor plan is picked and the lot is paid for by the builder. These mortgages are easier to negotiate. However, if you are building a truly custom home on land that you hope to purchase, you often have to pay a high down payment and have separate loans on the land and on the house. Many banks and brokers don't like lending money for land, so expect to pay more out of pocket in the beginning. You will likely need the help of a real estate agent or mortgage broker to negotiate this process, because it is more complex than making an offer on a home that is already built and appraised.
- how much longer it takes. A move-in ready house means that as soon as you take possession, you can move in. However, when building a home, you must pay a mortgage on a house that does not yet exist, while also paying for a place to live in the meantime. Since building can take several months, this is a cost and an inconvenience to consider before choosing building as an option.
For more information on whether you should build or buy, talk to a real estate agency in your area.
10 April 2016