When faced with the decision to buy or build a home, many individuals shy away from building it because they believe it is costly and the convenience of buying a home is very appealing. Entering the housing market to look for a dream home is an exciting time for both first-time buyers and seasoned homeowners alike. However, there are some very appealing benefits that homeowners may want to consider before putting the building idea to bed for good. When it comes to buying a pre-existing home, oftentimes homeowners are faced with the decision of making compromises of what they need and want in a home. But when building, homeowners are given the flexibility of building exactly what they want and how they want it. While the median price of a new home in the U.S. in 2015 was $305,000, the price of an existing home was $221,600. This may seem like a no-brainer to go with buying a home but with construction home loans and these benefits of building a new home, it may be a very tempting option.
Everything is new– building a new home means that you get to pick out every single detail down to the light switch covers and everything is brand new. If you did your research, your new home should not require any maintenance or servicing for quite sometime on the appliances and systems you picked out. The risk with buying a preexisting home is that it can often come with hidden costs. Old HVAC systems, water heaters, electrical wiring or whatever else you can think of in a home has a life expectancy and when buying a home you do not know the track record of service or any details relating to how long everything will hold up. Having to replace the air conditioning unit, water heater or rewiring the house can cost quite a bit of money and servicing adds up quickly. Researching and buying reliable brands and using good contractors can save you quite a bit of money in the long run when you build.
Your Design– along with the fact that everything will be brand new, it will be exactly what you want. The floor plan, the fixtures, the appliances, the color of the kitchen cabinets and whether or not you want a tub with your shower will all be decisions that you get to decide on. When buying a home, you will have to make compromises with what you want in a house versus what you absolutely need. If you decide to purchase a home and then later want to remodel, let’s say, a bathroom, that is going to cost anywhere from $9,000-$14,000 and that is only one small part of the home that you would make the way that you want it. It is really easy to see that changing just a few aspects of the home can really add up and close the price difference gap between buying and building a new home.
Financing– there are a few different affordable financing options available from lenders that offer homeowners flexibility when it comes to new construction loans. Once you have been approved by a lender, you are will have two options of loans either a One Time Close Construction or a Two Time Close Construction.
- One Time Construction- ideally homeowners will want to choose this option when rates are low because the rate will be locked in from the beginning of construction through the life of the permanent loan. Only one set of closing fees will be charged on the loan, which also helps keep the cost down.
- Two Time Close Construction- this type of loan is a good option when interest rates are on the rise because payments are kept lower due to the first loan only covering the costs of construction. The first loan is usually configured as an “interest only” loan, while the second loan is for the permanent amount of the loan. The downside to this loan is that 2 sets of closing costs will be charged but typically the lender will waive these if you lock in a permanent loan with them. The second close comes at the end of construction and you will get to choose between the locked in rate from the first loan or the current interest rate for your permanent loan, whichever is lower.
When it comes to deciding between building and buying, it is best to talk to an experienced homebuilder to answer all your questions on the building process. When it comes to financing a purchase or the construction of your new home, talking to an experienced lender is the only way to go. Nova Home Loans are the best in Phoenix and over a variety of loan programs to fit your needs. For more information on the construction loans that Nova Home Loans offers, get in touch with them today.