Your home will ultimately be the biggest investment you ever make in life. After considering a Budget, the next thought is usually whether to look at buying a home or building it. How do you know which is best for you? Each option has its advantages and disadvantages, let Globe Finance Inc. help you decide! Here’s a look at some insights into buying vs. building a home here:
Building Your Home
For those with time on their side, building your dream home could be well worth the wait. It is true that the process may essentially take longer, and it does not offer the convenience of buying an existing house-you’d have to find the land if you do not already own it and factor in all of the labour, material and permits required. Benefits do include the personal details/touches that you can put in to the designing of your home, thereby getting exactly what you want and this gives a sense of satisfaction you may not get from buying. Another prime benefit is that a new home is technically better for you as there are no potential health risks to be uncovered, such as mold or asbestos, and you can opt for more environmentally friendly materials to include in the building process. Upfront costs can be higher to build depending on your plan but can be recovered should you opt to rent or sell your home as it will require less repairs and maintenance thus making it more appealing.
When applying for a mortgage, you should be applying for both land and building costs, that way your lending institution will stagger the funds needed and there is little chance of encountering financial issues along the way-unless of course, some serious changes are made to your building plans. You will need to submit approval from town & country planning as well as compiled quotations from every party to be involved in the completion of your home. Additionally, you will be required to submit your Contractor’s comprehensive report of the home to be built from start to finish with your loan application and update the lenders at every stage of completion to keep them in the loop.
The major negatives of building a home can be considered the higher costs and longer time frame which are unpredictable at best as you go through the process, however, by choosing a reliable Contractor you can reduce the unforeseen setbacks. Do your research and choose a Contractor with good feedback and previous work ready to show you; he can also help you reduce costs with suggestions and recommendations on cost saving materials and other procedures. Remember, discuss your expectations thoroughly and set a solid contract in place to help reduce the incidence of going over a set Budget and for keeping within an agreeable time frame. Your Mortgage loan will usually require that you take out life insurance, for property valued over $100,000, and that you have a deposit of around 10%** The title deed remains with the lender for the duration of your loan.
Buying Your Home
Opting to purchase your home in itself is attractive for two main reasons-conveniences and cost. With attractive prices in the real estate market recently, you can easily anticipate moving in and starting life in your new home, however, this option will also require a great amount of patience while you consider things such as location and safety for example. Once you have been pre-approved for a home, you can begin your search knowing what your Budget is, however, most people will have a checklist of desires that will almost never all be found in one place. Be prepared for a waiting game at closing and bidding wars if more parties are interested in the property-we suggest retaining a qualified, reputable Real Estate Agent to assist in your search as this will take a load off of your shoulders being that they are accustomed to the ‘every deal’ headaches and will likely have many useful connections through networking who can help make the process more enjoyable for you. Once you make an accepted offer, your Agent can expedite the process and have you in your home within a reasonable time frame which makes this the preferred choice for buyers with time sensitive agendas.
Disadvantages of buying a home include the possibility of not getting exactly what you want, where you want it. Older homes may have a more attractive price point but updating them can become costly when added to a new mortgage. These additional expenses should be factored in to your overall costs and compared to the cost of building your home in order to determine which makes the most sense. Again, Mortgage loans for existing structures (usually over $100,000), will usually require that you take out a life insurance policy. Your deposit is approximately 10% and the title deed remains with your lender for the duration.*
**this can vary based on the institution providing the loan.