Construction Loan - Loans For Building A Home

Loans for Building a home

Build Custom Home / January 2, 2020

New Construction - Quicken Loans Zing BlogLife is full of dilemmas. Chocolate or vanilla? French fries or onion rings? Soup or salad? Perhaps the biggest dilemma of all, though, is deciding whether to build a new home or buy an existing home. Every situation is different. Let’s examine the differences between the two so you can be in your new home in no time.

Pros of Buying an Existing Home

Cost:

There are many pros to buying an existing home. For starters, in many cases, it’s cheaper than building a new home. According to the National Association of Home Builders, the average new home price in 2014 was $282, 000, compared to $208, 900 for existing homes. Whether you’re building a new home or buying an existing home, it can be expensive. If you’re looking to save a little money, starting from scratch probably isn’t the best idea. Even if the home needs some upgrades, you have the choice to delay the upgrades and allow yourself time to budget.

Timing:

Whether you’re moving to take a new job or just looking to upgrade from your current home, you can move into an existing home much faster. After you go through the mortgage process and closing, you’re set to move in. You don’t have to wait. This is especially helpful for people relocating for a new job or a family with children who will be starting at a new school and spare time is limited.

Awareness:

What you see is what you get. You’ve done your research, you’ve checked out the neighborhood and inspected the house inside and out. You know exactly what you’re getting. The floor plan and layout of the existing home isn’t going to change.

Flipping:

If you purchase a home and make upgrades, you can turn around and sell it for a profit. Depending on how time-consuming and expensive the upgrades cost, it could be well worth your time to consider this option.

Cons of Buying an Existing Home

Remodel:

If your home needs some work, it’s going to cost you time and money. Depending on what you’re remodeling, your costs could easily jump into the thousands. For example, the average cost of a bathroom remodel in the U.S. in 2016 is $17, 908, according to Remodeling.

Insurance:

Home insurance costs are higher with a preowned home than with new a new construction home. Some pre-existing homes come with out-of-date features, which increases the insurance.

Layout:

I previously mentioned “What you see is what you get” as a pro. However, it can also be a con. If you like the majority of the home but are hesitant about another part of it, you could develop buyer’s remorse. It’s not easy or cheap to change the layout of a preowned home. You need to make sure you’re happy with what you’re buying before you sign on the dotted line.

Pros of Building a New Home

Control:

Everything is in your hands to come up with your dream home. You have complete control over the design and layout. There shouldn’t be any remodel costs because you’re starting from scratch building exactly what you want.

Savings:

Appliances:

Since you’re building new, you may want to consider purchasing all new appliances to go with your new home. That way, you’ll get all of the big purchases out of the way at the same time. There shouldn’t be a need for any costs associated with fixing a washer or dryer unit for years to come if you buy everything brand new.

Cons of Building a New Home

Time:

If you’ve got time in your favor, building a new home can be great. If you don’t, however, building from scratch may not be for you. It can take anywhere from four to six months to build a home. Depending on where you live, the weather can also factor into the time it takes to complete the home. It’s also important to keep in mind other potential road blocks that could delay the completion that are out of your hands.

Limitations:

Say you come up with the perfect design of your dream home. Once construction begins, you realize that what you’re asking for is way out of your price range. Building a new home can be expensive. Make sure you’ve done the appropriate research to ensure you’re not getting in over your head. Making changes and purchasing upgrades from the builder can be expensive, so make sure you’re 100 percent happy with what you decide.

Legality:

Make sure you read all paperwork (including the fine print) from start to finish. Your agreement with the builder could limit your rights if an issue arises and you take the builder to court.

Source: www.quickenloans.com