Should you build or buy your next home?

By Craig Melton & Jason Russo

Are you buying or building a new home? This is what you need to know, or at least consider, before you do. Evaluate certain factors that will determine what is best for your family. Job location, quality of schools, and family budget are three major issues that will normally dictate your decision. What may benefit one family may not benefit another and there are many advantages and disadvantages involved. Consider the following when buying or building your next home.

When buying an existing home:

If buying a home, the first consideration will be whether to choose aa new or existing home. Location is always critical. Second, an existing home is less likely to have problems because the previous owner typically works out the kinks. In other words, the previous owners usually encounter and resolve any problems associated with the home—like a roof leak or problem with the air conditioner. A good rule of thumb is to upgrade certain aspects of homes that are five to seven years of age including flooring, curtains, blinds and/or air conditioners. On the other hand, homes that are two to four years in age will require far less attention, minimize start-up costs and SAVE money.

When buying new construction:

If buying a newly constructed home, consider these issues. The difference between this option and constructing your own home is that the builder handles the architecture, specifications and builds the house. The buyer simply chooses a pre-designed home and also picks colors, decorations and available upgrades. One huge advantage with this option is the warranty. Most builders allow a one-year warranty on all new homes which provides the buyer with peace of mind. If a roof leaks, the air condition breaks down or any other shortcoming occur within the first year, a typical warranty guarantees the builder will take 100 percent responsibility for the costs of repair. This is a great option for a family that does not plan on living in a home for more than one to three years. Remember, this option normally will not include certain decorating items such as drapes, curtains and ceiling fans.

When building a new home:

If building a new home, the following steps are necessary: Find the land, find an architect, meet with a builder, determine house specifications and obtain financing. Land or lot financing generally involves a period of two to three years, with the assumption that construction will begin within that period. Prior to building, loan approval is needed to secure the construction costs and loan product (ie: 30 year fixed). Once the home is completed, the temporary construction financing is automatically converted to a fixed mortgage financing option with no additional closing costs. This process may seem overwhelming but once clarified by a credible mortgage advisor, it is quite easy. T ip: Make a list of important items you would change in your existing home and key items you feel are necessary. Convey this list to design and architect team.

One must evaluate the time planned to live in the home, space requirements, features available and above all, find the best possible financing for your particular situation. Nine out of ten times, these decisions boil down to WHAT CAN YOU AFFORD. The most important step is finding a mortgage advisor that will carefully analyze each option and lead you to a decision that benefits your family.

Craig Melton and Jason Russo are mortgage advisors with Coastal Bay Mortgage – A Division of Resource Bank and can be reached at 407-833-9093 for a free consultation.