Purchasing a home is one of the most significant decisions you will make. Owning your own home is a sign of status, and it enables you to personalize your space and make your own decisions. You don’t have to worry about whether your landlord will let you get a dog or repaint rooms—it’s all yours to decorate and fix up as you see fit.
If you’re thinking about buying your own home, you can opt to purchase an existing home or hire contractors to build a home for you. Considering the advantages and disadvantages of each option can help you make a solid, informed decision. Here are some things to keep in mind as you decide whether to build or to buy.
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Financial Factors
Buying or building a home is one of the largest expenses you will incur in your lifetime. How much you can afford to spend on your home may determine whether you choose to buy a pre-existing home or build a new house. Building a new home is usually more expensive than buying a house. You may not be able to afford to build or may have to scale down your expectations in order to afford to build a home.
Consider your mortgage options. You may be able to find a lender who like a bank, credit union, or government-sponsored program who can help a borrower such as yourself get a mortgage that will help to buy land to build on. You’ll want to do your due diligence about any loan you take out and make sure to check out the interest rates and the profile of a prospective lender.
How much money you have access to will be determined by the type of mortgage you have, the downpayment you can afford, and your credit score. There are mortgages in some locations that allow people who do not have a downpayment to purchase a home. These mortgages may restrict where you can live or what type of property you can purchase, determining whether you’re able to buy or build a home. Do your research on all of these factors before you start to explore the real estate market.
Personal Timeline
It takes longer to build a home than it does to purchase a house. If you need to move on a fixed schedule, you may not be able to build.
Conversely, you may want to take time to repair your credit score or save for your downpayment. You may also be able to increase your downpayment by investing in a mortgage fund and using your money to generate revenue before buying a home. If you’re considering your options, you can talk to an investment specialist who will explain how mortgage funds work. There are no costs for joining or leaving a mortgage fund, which ensures full liquidity—you can access your funds at any time without penalty, making this an ideal way to invest your financial resources and increase your downpayment.
You’ll want to minimize your credit risk and find out about distribution schedules before investing in a commercial mortgage or residential mortgage fund. You’ll also want to research the past performance of a fund and choose one that has consistent returns. Be sure to speak to a portfolio manager to make sure that you have the full picture before you get started, and ask that portfolio manager about any commissions. You can also use the revenue from your capital gains to pay down debts and improve your credit rating.
Securing Property
To build, you will need to purchase land and secure permits. This journey begins with shopping for plots. Reputable companies specializing in land sales, such as AcreBin, can help you identify land available. If the plot you’re considering is too large for your needs, you can also use AcreBin to sell a portion of the land. Working with a company specializing in land sales can be beneficial because they know all of the factors to consider when building or selling land and can help you locate a suitable property.
Personal Needs
Your personal needs may be a factor in your decision to build or buy. For example, if you have a family member who uses a wheelchair, you may want to build a wheelchair-accessible customized home. You may also want the option of expanding your home in the future, which could prompt you to build on a large plot to ensure you have room to build an addition. If you plan to operate a business from your home, you may also need parking or work facilities. It may be easier to build a new home than to locate an existing property that suits your needs.
Health Considerations
Older homes can contain some hazardous elements. Asbestos can cause cancer and may be found in paint, flooring, and insulation, and homes constructed before 1978 may contain lead paint. Exposure to lead paint can cause damage to your brain, organs and nerves. It’s also been linked to behavioral issues.
Older homes may also contain mold. Mold can grow inside walls and under the floorboards and can trigger asthma attacks and cause lung damage. When you build a new home, you can monitor the process and be confident you are moving into a home free from harmful substances, such as asbestos, lead and mold.
