Purchasing your first home is an exciting time, but it also comes with plenty of decisions to make.
Before you get stuck on paint colors, landscaping, and new furniture, you might be wondering whether you can afford to build a house rather than buying a pre-existing home. Building a home may be more affordable than you think, but understanding the differences between buying and building and asking yourself the right questions will help you make your decision.
What are the differences between building and buying a home?
There are pros and cons to both buying or building a house, and deciding really comes down to personal preference. In today’s market, the prices between building and buying a home are comparable.
One major difference is that building a home means no immediate renovations; when you buy an older home, chances are you’ll find something that needs to be repaired, updated, or replaced, and these renovations can really add up.
Many first-time homebuyers are concerned about the amount of time it takes to build a house. While a modular home does take an average of 3-4 months to complete, renovations in an existing home can take just as long (and you’re often forced to live in the house during the renovation process to save money.)
Are you ready to build?
A common mistake that many first-time homebuyers make is taking the maximum home loan available to them. Your bank may offer you more than you can afford, which can lead to extra fees and larger monthly payments. Look past your total loan qualification and instead take a loan with a mortgage you know you’ll be able to afford.
Before you build, ask yourself these questions:
How long do I plan to stay in my next home?If you plan on staying in your new home long term, having a custom built home which meets all your specifications might be the right choice for you.
What are my “must haves” in a home?Certain house features and customization options are more expensive when they’re added to an existing home.
Am I willing to put in the extra work?Building a home requires more decisions and extra time collaborating with your builder to make sure everything in your home fits exactly what you’re looking for.