Building your next home to your own specifications is an ambitious undertaking. Building a home often costs more than buying one, which might mean a larger mortgage bill. It will also take months or years to complete. However, building a house gives you the freedom to design a home to your own preferences and specifications. The home, and all of its fixtures, will also be brand new, eliminating many of the problems that can appear unexpectedly after moving into an existing home.
In general, building a new home costs more than buying a comparable existing home. This is because of the numerous costs associated with building a new home. Buying an existing home comes down to one price, which you agree to pay to the owner. Building a home includes building costs, which may exceed budgeted costs, and the cost of land to build on. Because all of a new home's fixtures and materials are new, it will naturally cost more than a similar home in which everything is slightly depreciated.
Building costs include land and the price that a home builder charges for construction. While builders offer cost estimates, factors such as the rising cost of materials and delays in the construction process can add to the total bill. A new home will also require all new appliances, furnishings and landscaping. As with buying a home, the area where you choose to build, the size of the home and the features you select for it will affect the total cost.
Buying an existing home usually starts with determining your price range, which is how much you can afford to borrow. Getting preapproved for a mortgage is a good way to determine your price range before you start shopping around. In addition to the price of a home, as a buyer you may be liable for a portion of the closing costs, as well as fees for a real estate agent. Add in any money you plan to spend decorating, moving or repairing the home, and you have the total cost of buying.
Making a Decision
Deciding between buying an existing home and building a new one comes down to your own financial situation and needs or desires for a house. If you want a great deal of control over the finished product, building might cost less than buying an existing home and making extensive changes. If you already own land in an area where home prices are high, building a home may also cost less than buying an existing home with an inflated value. In other cases, making a few compromises and buying a home that's already built will save money compared to building your own home.