Let’s discuss the options of buying an existing home versus building a home. It can take a long time to find that perfect house.  You could just build it!. The dream of having exactly what you want, however, those wants can come at a very hefty price tag. There’s a lot that goes into building a home, let’s lay that out.  Sometimes your budget cannot compensate for the amount of square footage you desire and that fabulous wrap-around porch you have always dreamed of sitting on and sipping your morning coffee. When financing a construction loan, you will have to purchase a lot or acreage. Then you will need to hire a home builder and design your home! Fun stuff, huh? This process can be so much fun, but also stressful. What if your family needs four bedrooms and your budget can only accommodate a three bedroom house, unless one of the bedrooms is the size of a cracker jack box? Then the planning of paint, counter tops, cabinets, bathtubs, showers, wainscot for the shower, plumbing fixtures, light fixtures, ceiling fans, flooring, and the list goes on and on. Once you have this in place and a contract with your builder, you will proceed to your lender. The lender typically likes 10-20% in equity in your new home. The lender sends the construction specification and plans and survey of lot/land to an appraiser for a value. Typically, after the appraisal is completed, the lender will decide on your out of pocket expenses. What if you own your lot/land free and clear? That is awesome, because you have equity! You will close on your construction loan and then the lender will distribute funds to the builder as the draws are requested. This is the interim construction process. Typically the lender or will have a third party go inspect the progress of the home being built before releasing the draw funds. You will pay the lender interest only monthly until the construction is completed. Once the home is completed, the lender will order a final appraisal and the appraiser will inspect the completed home and submit an appraisal update/completion report to the lender. You will now have a second closing and refinance your interim construction loan into permanent financing where you will more than likely have a fixed interest rate and will be paying principal and interest. Whew!  That’s a lot!

Sometimes, buying an existing home can be less costly than building. Well maintained existing homes have all the quirks fixed and the deferred maintenance taken care of. You might be able to find a very loved home with the square footage that you desire, the amount of bedrooms and bathrooms you desire and that wrap-around porch you have dreamed of, for less. Existing homes that have been loved and lived in, have characteristics imprinted that sometimes can’t be duplicated. If they can be duplicated, that is called a reproduction cost, which is usually very costly. If the walls could talk in your home, what would your walls say? What about all the precious memories that happened in a home? Sometimes new home owners can feel the love that was once given in an existing home. Sometimes an existing home is in your ideal location. In my previous article, I discussed the pro’s and con’s of remodeling an existing home. So sometimes you have to weigh your options. Is it less expensive to buy an existing home and remodel versus the cost of building? Sometimes the cost of building will be better for you in the long run to get the exact home you’ve dreamed of.  Sometimes location outweighs everything.

Waylon Jennings sings in Luckenbach, Texas, “four-car garage and we’re still building on, maybe it’s time we got back to the basics of love”.  So apparently they had built a home and they still weren’t happy. My best advice, whatever option you decide to go with, home is where the heart is. Make sure your heart is in it and those walls will be decorated with memories that will last a lifetime.