Should you buy an existing home or build a new one?

In this environment, it’s no easy feat to get your foot in the door with real estate. You really have to avenues buy a house already in existence or build a new one. Here’s the skinny on both…

Building a home 

Building a house is not for the faint of heart.  It requires a considerable amount of time, planning, and energy.  3 things you will need:

  • Blueprint/plans
  • Budget
  • Schedule

All three will require a significant of your time in making sure everything is things occur in a timely manner. Everyone also has to be on the same page this is the budget. We cannot deviate from the budget. This is the timeline, we must adhere to the timeline.  Additionally, because it’s a new build on average you’ll pay 5 to 10% more per square foot than used housing. In other words, you get more bang for your buck with used housing than you do with building a home. Beyond that, some lenders require you to own the land you intend to build on already. 30% down or more for land loans is not uncommon. So if you are budget-minded and you’re trying to purchase a home that gives you the best possible financial outcome building house may not fit that bill. If building a house was as cheap as buying a house is, everybody would be building, most people typically buy resale homes because you get can get more bang for your buck. This, of course, is not to mention the reality building materials i.e. lumber, windows, etc. to name a few are in hot demand which is parlaying into significantly longer turn times to procure these needed materials. Costs for such materials are also up.

Buying a used home

Depending on the area, location, and type of property you’re getting the house might be completely turn-key and totally renovated. You will pay less per square foot when compared to building so the resale gives you far more vast options in terms of area and location. The reality is- it’s a house it’s never going to be perfect. You can fix up the house and mold to your specifications or do a remodel and have options for the house that’s already built.

So here are some things to consider…

  • more affordable to buy resale than build
  • financing is better just 3.5% down for FHA or 5% down for conventional

You may be much better off from a financial standpoint buying a house already built. Keep in mind a $100,000 in spending powers translates to %600 a month of payment. So for a house for example that costs $770k to build, you could buy a resale home for $700k and save the difference in payment of about $450 a month. $450/month or $162,000 less over 30 years assuming a 30-year fixed-rate mortgage.

Looking to buy a home? Get a no-cost quote today!

 

 

 

 

 

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

Why your income is the biggest driver of purchasing power

Why your income is the biggest driver of purchasing power

When it comes to purchasing a home, your monthly income is the most influential factor,…

How to ease lending qualifications when buying a home

How to ease lending qualifications when buying a home

Hey there, fellow dreamer! Are you ready to take the leap into homeownership and turn…

5 practical ways to increase your purchasing power when buying a home

5 practical ways to increase purchasing power when buying a home

Buying a house today can be an arduous task, especially when you consider the many…

Scott Sheldon's The Mortgage FIles Blog

How the housing industry may be affected by the upcoming real estate changes

The recent settlement involving the National Association of Realtors regarding real estate agent compensation has…

View More from The Mortgage Files:

begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!