Buying an existing home versus building your dream home can come with a long list of pros and cons. Start out by considering your needs, location, and timeline. Here we break down the list into major considerations when making this big decision.
Buying an Existing home
Buying an existing home comes with less decision-making and may seem like the easier option overall. You can add touches to your style and fix up aspects you don’t like. However, you may have to make some big compromises.
Pros
Move-in Condition
When buying an existing home, you will likely be able to move in quickly. Unless you are buying a major fixer-upper, you should be able to move in when you get the keys which can be convenient if you are in a time crunch.
Lower Prices
You’ll likely find that it is cheaper to buy an existing home, but there are varying factors such as how the market is. Typically, a home loan comes with a lower down payment and a better interest rate than a land loan.
Fewer Decisions
Building a custom house involves lots of decision-making. Buying an existing home allows you to focus on the areas that need sprucing up or that you want to customize on your own time.
Architectural Detail & History
Many people may see a benefit of older homes because of their architectural detail and history which can be much harder to replicate if building a new home.
Cons
Outdated Floor Plans
If you are looking at a home with an older floor plan, often the layout is outdated. Kitchens, bedrooms, and front rooms were built for a different era. Many times, the floor plan is more closed which can be more complicated to renovate if you are considering that option.
Outdated Technology & Fixtures
It comes as no surprise that purchasing an existing home may contain outdated technology and fixtures. It can end up being more expensive having to redo something than install it new. This can also cause you to go over your initial budget for the house you purchased.
Potential for More Repairs
Older homes may have more repairs needed in them which can have you spending more money where you didn’t expect to. Older appliances, plumbing, and electrical systems can run into major maintenance issues.
Compromise on Home Style
Finding a home you like that reflects your style can be tough. When purchasing your home, you will probably end up having to compromise on some aspects of the house versus completely customizing your own if you were to build.
Building a new home
Building a brand new home may sound like a dream. You get to choose the ideal layout for your needs and have a say in the design elements. However, the process may be daunting.
Pros
Complete Customization
When building your own home, you get exactly what you want and whatever personalized finishes and touches you enjoy. You have a blank slate to work with to customize your home to your wants and needs.
Lower Maintenance
Everything in your home is new so there will be less ongoing maintenance that you have to worry about while repairs will be minimal/nonexistent for a while. This can save plenty of headaches and even thousands of dollars which can help you better predict monthly home ownership costs.
Energy-Efficient & Healthier Homes
When building you’ll be getting new modern materials for your home, so you won’t have to worry about potentially dangerous materials already being there. You can install “smart” technologies that are built with energy efficiency in mind. You can prioritize sustainability in your home.
Can build (just about) Wherever you Want
You can build your dream home in your dream area. You can pick out a location and search for land where you choose. When purchasing an existing home, you often have to compromise on location and probably won’t get exactly what you want.
Cons
Additional building costs
Usually building your home costs more than purchasing an existing home. There is potential for higher costs depending on the amenities you wish to include. Other building costs to consider include site costs, foundation, framing and exterior finishes, major home systems, interior finishes, and plot
Construction Loan Complications
There is a little more involved in getting a mortgage for a building than getting a traditional mortgage to buy a preexisting house. You also may need a higher down payment because construction loans are considered higher risk.
Takes More Time
Building a new home takes months to build and there is a high potential for delays. Delays can happen due to the weather postponing work, materials being out of stock, and many other factors.
More Stress & Effort
Building a home is a longer process that requires a more hands-on approach. You have to work with a variety of people, review contracts, approve specifications, and manage financial aspects. There are more factors you need to consider such as your needs, location, timeline, and the availability of materials and labor.
Unfortunately, there is no definitive answer to whether one option is better than the other or one is cheaper than the other. Start by making a list of your wants and needs in a home to see which option suits you best.
Sources: Zillow, The Mortgage Reports, Realtor.Com, Rocket Mortgage
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