Should you build a house or buy a rebuild home?

For consumers who are beginning the road into homeownership, the notion of building a home versus buying something already built may seem attractive. If you are trying to decide, here are some factors to weigh in on…

Building a home generally means you need to have the land first. Financing can sometimes be problematic as you’ll need to find a lender that offers construction financing, and/or a lender that is willing to make you a loan to buy the land. Then there are the costs of the loan, what’s the feasibility like for water, whether is it well or septic, and electricity, in relation to other local municipalities. This can only be problematic for financing but also could be problematic in terms of finding a contractor let alone the construction costs. That being said financing for something like this could end up being  30+ % down. So if you’re going to be building a home you need to be thinking about a big cash infusion on your part. Additionally, you’ll have to find a contractor, possibly even an architect, as well as invest the money for the building plans so the lender knows what your long-term project is. Essentially when you’re building a home, you elect to sign up for the role of a long-term project manager, not a project for the faint of heart.

Option B- buy a home already built, you can always remodel later. Homes have endless financing options with greater flexibility, no money down, long-term fixed, and far less capital. You don’t need an architect, you don’t need a contractor, and you don’t need to project manage anything- it’s a much more fluid process. If you’re under the notion building something is going to be more affordable than buying something on the open market pause for a moment why is everyone else buying single-family homes? Well, the terms are somewhat substantially better, loan programs are more lucrative, they’re more flexible, and financing is far less pricey.

It’s already built you can get the same bang for your buck in most cases, knowing you can always swap out your home and buy something else or rent something else out anyway and have a bit more flexibility. As for it being more affordable to buy a home versus construction in most cases, it is generally less expensive to buy a home than hire a contractor, an architect, and possibly laborers, then go through the red tape process of finding the land, and then finding a lender, and putting the whole thing together, it’s a project in itself.

In the time it would take you to build something from scratch, you probably could’ve bought a single-family home waiting for the market to turn generating new home equity or an opportunity to refinance anyway, most likely. If you’re after affordability look for a single-family home to buy. If the objective however is building the dream home, with cost being a secondary factor then build.

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