June 23, 2021
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Real Estate & Business

Scott Sheldon
Should you buy an existing home or build a new one
May 7, 2021

In this environment, it’s no easy feat to get your foot in the door with real estate. You really have two avenues buy a house already in existence or build a new one. Here’s the skinny on both…

Building a home 

Building a house is not for the faint of heart.  It requires a considerable amount of time, planning and energy.  Three things you will need:

• Blueprint/plans

• Budget

• Schedule

All three will require a significant of your time in making sure everything will occur in a timely manner. Everyone also has to be on the same page. This is the budget, we cannot deviate from the budget. This is the timeline, we must adhere to the timeline.  Additionally, because it’s a new build on average you’ll pay 5 to 10 percent more per square foot than used housing. In other words, you get more bang for your buck with used housing than you do with building a home. Beyond that, some lenders require you to own the land you intend to build on already. Thirty percent down or more for land loans is not uncommon. So, if you are budget-minded and you’re trying to purchase a home; that gives you the best possible financial outcome building a house may not fit that bill. If building a house was as cheap as buying a house, everybody would be building, most people typically buy resale homes because you get can get more bang for your buck. This, of course, is not to mention the reality building materials i.e. lumber, windows, etc. to name a few are in hot demand which is parlaying into significantly longer turn times to procure these needed materials. Costs for such materials are also up.

Buying a used home 

Depending on the area, location, and type of property you’re getting the house might be completely turn-key and totally renovated. You will pay less per square foot when compared to building so the resale gives you far more vast options in terms of area and location. The reality is- it’s a house- it’s never going to be perfect. You can fix up the house and mold to your specifications or do a remodel and have options for the house that’s already built.

So here are some things to consider

• More affordable to buy resale than build

• Financing is better. Just 3.5 percent down for FHA or 5 percent down for conventional

You may be much better off from a financial standpoint buying a house already built. Keep in mind a $100,000 in spending powers translates to $600 a month of payment. So, for a house for example that costs $770k to build, you could buy a resale home for $700k and save the difference in payment of about $450 a month. $450/month or $162,000 less over 30 years assuming a 30-year fixed-rate mortgage.


Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at