Building vs. buying a home

When you're in the market for a new home, you may be considering whether or not to buy or build a house. While the housing market offers a wide inventory of styles, price ranges and locations, buying may not suit everyone's needs or desires. Building a home, on the other hand, allows homeowners to customize the property to their unique specifications, creating a place that's perfectly suited to the habits, lifestyle and tastes of their families.

There are different costs associated with buying and building a house. Buying a home may mean you initially sacrifice some of the features you want, possibly choosing to make renovations later. It also means you are subject to the market. When there are more existing homes on the market than there are sellers available to buy them, prices can be more attractive. However, in a seller's market, you may face a markup you wouldn't otherwise see. Consider the following costs associated with buying a new home:

• The initial purchase price of the home and land
• The time it takes to find a home, negotiate an offer and close
• Any home renovations you need to make to adapt the home to your family's use
• Closing costs and legal fees
• A real estate agents commission

Building can also be costly and time-consuming. While it offers a perfectly customized home in the end, it can often take longer than you might expect to go from architectural renderings to move-in date. When builders and contractors are busy with many new building projects, it can be difficult and expensive to obtain their services for your new dream house. When they hit slow seasons, just like in any other industry, they're more amenable to making price concessions. Consider the following costs for building a new home:

• The initial cost of the land if you're not building on land you already own
• Cost of materials and design services
• Contractor fees
• The time it takes to build the home

It's important to consider the state of supply and demand at any particular time. There are so many tasks to complete - from buying the lot, securing building permits, hiring a contractor and seeing to utility hook-ups, as well as getting construction financing in place. And don't forget those choices about various styles of home floor plans.

After considering all those requisite steps, the idea of buying a pre-existing house might begin looking a little easier. However, don't forget that buying a home comes with its own considerations. You'll still need to decide from among the different types of homes to buy and then find a home that meets the majority of your qualifications.

You might begin thinking of the hybrid strategy of buying a fixer-upper. This option allows you to start with a structure in place that you can renovate as much as you want to fit your tastes. This will also be costly, but having the house constructed will save some time.

When hiring a contractor to build a home or renovate your new fixer-upper, it's important to obtain several quotes and investigate each contractor's work before making a final decision:

• Check with the Better Business Bureau to see if the contractor has accumulated complaints.
• Make sure the company has sufficient workers compensation and general liability coverage. Otherwise, you could be stuck with the bill for any accident.
• Check for quality workmanship in the contractor's current and past work.
• Be wary of unexpectedly low bids, which might not cover costs that are certain to develop later.
• Make sure the company has a permanent address and a good reputation with lenders and vendors.
• Ask friends, family or co-workers for personal recommendations.
• Make sure you receive a clearly written contract for the work.

Consider the costs of buying or building a house to decide which option might be right for you. Whatever you decide, Citizens can help you with financing. Talk to a home loan originator at 1-888-514-2300 to learn more about our mortgage offerings and financing for new home construction.