With custom building you get the house that you want exactly where you want it.

Also which one is a better option financially? existing house, if you can find the one you like

Is it easy to get a mortgage to build a house? - NO [construction loan]

If what you need is pretty standard, then buying an existing home can be better as so much of the work is already done. It also allows you to move in right away and gives you options for remodeling or additions on your own time schedule as budget allows and needs change.

However, if what you want is unique and can only be achieved through a custom build, or if you find a lot that has something unique about it be it a view or other feature then building would be your choice. But recognize it is a more expensive option than an existing home and far more time consuming.

We built a home, but we had the lot in the family already and our desires were very unique to our situation, and we built green. But we also enjoyed the process. For others, it is not enjoyable but a source of extreme stress as costs overrun, mistakes are made, changes are made, facing thousands of decisions big and small, dealing with building inspectors and town government regulations, etc. If you fall into the latter, than don't do it.

I'm building one now. Stressful, expensive, time consuming. We started out wanting to buy an existing home that we could remodel over time. But somehow we got this idea to build. I would never do it again.

That said, it's a nice house! Nothing like it on the market in our area in the 4 years we've been looking...and we've seen literally every property that has come on the market during that time.

I think its a personality thing. The compromise would be to build with one of the major production builders. There's a reason why they are in business. If you don't need true custom it is much more reasonable, quicker, and you don't make nearly so many decisions.

Good luck!

We started out looking to buy. The houses in our area are ridiculously priced (for our area) for the square footage we need. Houses are selling crazy fast here so it was quite a wait. We finally decided to look for land instead, but we also had the luxury of time. It has been extremely stressful. We were able to get exactly what we wanted this way though. The home suits our family perfectly.

You've already received good answers. Building a house will be "more". More money, more money down, more opportunity for going over budget, more time involved, more stress ... but also more suited to your own lifestyle.

Before you make up your mind, look around at existing houses so you'll know what's available and whether it would make you happy. Examine your finances too; for a first house, you shouldn't push yourself financially; while you want the house, it's not the only thing that you want. Once you're well educated about the offerings in your area, make up your mind whether to buy or to build. For your first house, your answer is almost certainly BUY.

Our reasons for building are fairly common: The things that we need/want aren't "standard". We want a small house; our youngest is about to finish high school, and we want to downsize for our retirement years. We want an "entry level house" in terms of size; that is, we aren't interested in an oversized master with a seating area, we want only one eating area and one living space ... yet we want to include features that are found in luxury homes: built-ins, walk-in closets, a large pantry, high-end finishes, and a pool. We also want the house to be comfortable for "aging in place"; that is, we want the laundry to be connected to the master closet, a large no-barrier walk-in shower, no steps in the garage entry. All these things aren't found in a typical house, so we've chosen to build.

However, building will be more expensive than buying, and (unlike buying), it's impossible to know at the beginning just how closely you'll be able to stick to the budget.

Ask yourself, What are YOUR reasons for choosing to build or buy. And work from that point.

Depends on your area and market. If inventory is low, building might be a good option. We would have purchased an existing house if we had found one that we liked and were not outbid. After over a year of looking, went to see builders. In our local market, people who want to build for themselves can slightly outbid spec builders on tear downs. Given the rapidly rising market here and the premiums being paid for "move in ready," building can ultimately be cheaper. But the market can swing the other way too.

Regarding financing, in part it depends on the bank.

Good luck!

If you knew that you could get 85% of what you want in a house for 50% less money, compared to 95% of what you want for 50% more money for that last 10% of "perfection", would you still be interested in building?

Building, for us, has been one of the most fun and frustrating things we've ever undertaken. From design to near completion, the house is unlike any spec home you will walk into. But it cost more than it was bid. It took longer than what was estimated to get in. Many subcontractors are prima donnas and they will do it "their" way (even if you have detailed architect's drawings) unless you have a good GC or you are there to catch them. Nobody will have the vision for the home that you have personally, but there is a lot of satisfaction in seeing your crews "get it" when they see the final product. Our chief mason gave me fits about our stone choice and then told me after the fact it was one of the best, most chip resistant stones he'd ever worked with. Our iron railing guy was 5 weeks late putting in our safety rails which should have kept us from getting our certificate of occupancy when we did. We received a little grace in that regard... but tempers flared when we realized he had not even started our job months after he'd already received a large chunk of money for materials.

So, if all of that (and more) sounds like something you could navigate without too much difficulty- building may be one of the most gratifying things you ever do. We would not do it again at our age, but we are glad we did it this time.

Almost everyone has touched upon one aspect or the other of this "building vs. buying" debate. You are neither the first nor the last person to face this dilemma. We don't know in which country are you looking to build/buy a house ( it matters a lot!), but buying a house is a one big transaction between two people and building a house involves lot of comparatively small transactions between you and many people.

Ask yourself some simple questions:
1. Have you looked at (and rejected) all the properties that you could buy?
2. Do you have atleast 25-50% extra cash to take care of cost overruns?
3. Do you have a lot of spare time for visiting the site atleast thrice a week (if not daily)?
4. Are you okay if the construction gets delayed?
5. Do you have someone in the family who can pitch in for you and take care of the construction in case you are unavailable
6. Are you more than adequately insured for medical and life exigencies?
7. Is the property that you plan to build, easily sale-able?
8. Are you ok building the house partially, moving into it and then completing it in a phase-wise manner?

If the answer to all of the above (except 8) is "YES", then you are pretty much good to go. If it's anything other than "YES" (count "maybe" as a "NO"), then think hard. And talk to people in the area who have built houses before you. Take their advice.

Team Apnaghar
www.apnaghar.co.in

It really depends on your location. Where we are building, the completed home will be worth far more than anything we could buy existing in our budget… and it has land and views (virtually impossible to find in our locale). We looked for years to find something we could work with or build on to (for aging parents), with only one good listing. That home sold within 24 hours. So no local options that I would want to invest our hard earned savings into were available. If you are just looking for some floor plan customization, I'd choose to remodel over building for sure. But if land is what you are after… building ROCKS. Start looking now… good land is hard to find. ;) But I would only choose it if it were (hopefully) the last home I was going to move into. We've put our heart and soul into this process and it would be painful to do it again.

As to all those comments above: I think they offer some practical advice, but also come from people who benefit from the illusion that building a home is just for the rich and well-off, or for people trying to mimic that lifestyle. That certainly isn't the case for many, and very few people could have 35-50% extra cash after putting the down payment toward construction. Basically there are always risks with real estate. You can buy an existing home and lose your down payment and half the value of the home in 3 short months because of the economy, or you might have something catastrophic happen while you are building. It takes a little faith to do either these days. :)

Yes, construction loans are harder to get than a regular mortgage, mostly because so few banks offer them these days.

There are several ways to build, and not all of them need 30-50% more cash than was quoted. You can build a tract home, you can do semi-custom in a neighborhood, or you can go full custom. Then, you can have different types of contracts in place that protect you from these massive overruns.

The house we are building will not have cost overruns because it is a fixed price build. We found a plan and modified, modified, modified. Then, we specified, specified, specified. We got a fixed quote on the build. Everything will come in within 10k of our loan and will come in exactly or less if we stay within our allotments (which we researched and adjusted to meet our needs on a per vendor basis).

The loan... building requires a construction loan (usually). You have to have extremely good credit and at minimum 20% down + 6-9 months reserves + enough to live on in some other place while you make draw payments for a build. It's a LOT of cash for most people. The cash requirement was our biggest hurdle.

MamaRachel, I'd love to hear when your build is complete and the bills are paid whether your post build experience matches your pre-build expectations. I know it can be done, but it rarely is.

Amen Annie. :) I was sure I was making the right choice before we started building too.

This is an answer that is going to be so deeply rooted in your own personality and financial situation that no one here can really answer it. The one common theme about building new is that it almost always seems to take longer and cost more than anyone thought it would going into the process.

Looking back, the biggest stressor for me was the length that the stress goes on. Every damn day something goes wrong, costs more, or looks worse than what you envisioned. And on one level I get why that's going to happen. Building a new house is a very complicated thing - multiple trades involved. And with multiple people, you're bound to have either personality conflicts, or a few bad apples in the bunch.

Looking back, I'm honestly not sure if we made the right choice. In our area I could have bought something cheaper than it cost to build new. We built because I thought I could get the "perfect" house. Yeah well.....nothing is ever perfect, is it?

I've made my peace with our decision but if I could do it over again, I'd look harder at buying an existing property. We were half way into our build when a house 2 doors up from ours hit the market. It cost less than ours did, and I think it's a nicer house in many ways. That was tough to swallow.

In the spirit of complete disclosure, buying our first house was ALSO an exercise in stress:

- My then-fiance was dead set on owning a home and bringing his bride to a HOUSE, not an apartment. We closed on the house on Wednesday and were married on Saturday. In retrospect, it was "too much, too fast". I wouldn't do it again in that way.

- We bought a house that was a bit unusual: The couple who custom-built our house lived in it for just two months, then got a divorce. Neither could afford to keep it, so they ended up "returning it to the builder". It sat empty for two years before we bought it.

- We found the mortgage process unnecessarily lengthy and stressful.

- We, two college graduates with excellent credit, had trouble getting the city to turn on the water because the people who'd lived in the house before didn't pay their bills.

- Once they turned on the water, we discovered a giant leak under the sink. GIANT. It wasn't found during the inspection because the water wasn't turned on. The builder did fix it, but it ruined the kitchen floor. With our financial priorities elsewhere, we lived with it for several years.

- Several days after we moved in, the city turned the water off -- again, because the previous residents didn't pay their bills.

- We bought new appliances, but the washer had a problem of some sort. The guy from the appliance store came to fix it ... on the day that the city turned the water off. Yeah, washing machine repair men are great at working with no water.

- Several weeks after closing, the mortgage company realized they'd calculated our loan package incorrectly (they'd figured it based upon the wrong county), and they wanted more downpayment. We'd already closed, so we said, "Sue us." They did. That was when we decided two things: We'd never again borrow from someone to whose office we couldn't conveniently drive, and we wanted to work towards being debt free. That first house was the only mortgage we've ever had.

- The water heater went out.

- The mortgage company collected escrow from us each month, but they didn't pay our insurance and tax bills, so we received nasty letters from the city.

I know a few other things happened, but I can't remember them right now. In contrast, buying our second house was much less stressful.

mrspete...

That's why I recommend buying your first house, not building. Imagine learning about building on top of learning about the home buying process. To me that's just too much. We almost built our first home. Sure it would have been a tract home which would have made it easier but now I'm glad we didn't do it.

Well said GreenDesigns and I have to agree with you about having owned first. Although I don't necessarily think 3 is the magic number. I think that depends on the person. However, I would never build a first home. I can vouch for the idea that after a few homes you know what you really want and need for your lifestyle and not what you think you want.

And as I'm finding out, even when you build, you still will not necessarily get everything exactly as you want. However because you will have had the experience of living in different homes, you'll know what can and cannot be adjusted to fit your lifestyle.

I don't think you have to have owned previous homes, but having lived in different homes is helpful. Sometimes knowing what you don't want in a home is just as helpful as knowing what you do want in a home.

The difference between living in a home you have owned vs a home you rent is that in a home you own, you most likely will have to do some changes throughout the years and you learn a lot every time you have to change out fixtures, replace windows, doors, roofs, etc.

If you can find an existing house that is at least somewhat close to meeting all your needs, I would say buy. If you build, the expenses do not end with the last finishing nail. There is landscaping, window treatments, those perfect furniture pieces you didn't think you would need, rugs, etc that keep asking you for cash.

Better? Sometimes. Cheaper- almost never. Some areas simply don't have homes that may meet a particular family's needs. In our case, we had very particular wants and needs, and I don't think we could have found them in an existing home. We wanted a small, very energy efficient home with an open floor plan- something that doesn't exist in our area. Most homes around here are very poorly built, and cram too many bedrooms in a small house.

Our solution was unusual- we designed (with a lot of help here) and built our own house. I did all of the work except excavation, concrete, and drywall. We have done this over a long period of time, and all out-of-pocket, so we have no mortgage. That being said, we would probably barely break even on the materials we invested, never mind the labor. I ran our project through a cost estimator to see what it would have cost to have a contractor build it, and it was way beyond what our house would sell for.

Is our home a poor investment? From a strictly financial standpoint- yes. For us, though, it is realizing the dream of a lifetime, and we have a wonderful place to grow old in. You can't always put a dollar figure on what makes you truly happy. I agree that young people should own a few houses to get a feel for what they want. Spending more for a house than it would sell for is a bad idea for young people. Nearing retirement, we can say that this is our last home, and there's a fair chance that that will be true. Had we declared our first house to be our 'forever' home would have been a mistake, not only from the viewpoint of the house itself, but also from the viewpoint of its geographic location. Life changes, people move. Whatever you do, make sure that you are always in a position to handle what life throws at you without getting 'upside down' in a big mortgage.

Before we bought our current custom built home we brought over a friend of my father's who is a custom builder to get his opinion regarding whether we were getting a good price for the house. He told us that it would cost him twice what were paying for the home to build it. I never consider a home a financial investment these days but it's even worse when you build. The other posters are right. You need to have strong reasons other than financial ones for building. In our case, we need to move closer to my husband's business and my sons' school. In that area there are no houses to be had that work for our 3 generation family. I considered remodeling but the few that might work would require me to get rid of the backyard which wouldn't be fair to the kids. After we remodeled we'd be left with a house with a weird layout that we couldn't resell at some point.

I think a clarification needs to be made on what constitutes "building". I find most people (not on this forum) say they are "building a house", when in actual fact, they are buying a newly built house, and get to pick the tile colour. If that's what you mean, going to builders' model homes and picking one and waiting 6m-1yr or more to get your house, then I have known many people who've done this for their first place. And it's not too much different than buying an existing house.

Most people on this forum are much closer to actually building a house. (Mushcreek is one of the few actually, literally, building a house. The rest of us are writing checks, but still active in decisions and planning.) THIS IS NOT FOR BEGINNERS!!! I like Green Designs rule, although this is actually my 3rd house. You need to understand what they mean when someone asks you what colour you want the soffits to be, and where to put the hose bibs. You need to know whether rooms that everyone says you need are really necessary. When buying my current house, I insisted on a formal living room. A room that stays clean for guests seemed really important. In reality, the room is the messiest in the house. Only the dog ever sits on that couch, and we end up dropping off bags when we walk in the house, and they stay there for weeks because we don't see them. So now I know that space would be better used for a mudroom, if space is at a premium.

Good point amberm145. If you're building a tract home where the builder says this is the way the house lays out. You can add the bonus room or not. You can add a third garage or not. Here are your choices for door cabinet styles, tiles etc then yes you probably can build for your first home. I'm also thinking the numerous condos and townhomes that are going up in my area. Come in pick out what you like from what they show you and you're good to go.

However, if you're building a truly custom home where you, or an architect design the home (or you find a plan online and modify it), where every decision needs to be made by you, then I would not build if it's your first or even your second home.

Just to offer a different perspective....we are building our first home. We didn't have an architect design the home, but we worked with a draftsman to develop the plan. We did work on the plans for a good 6 months with them (not counting all the time we personally spent to come up with a good workable start before ever starting). We tried to use all of the house plans we saw online, homes of people that we knew were currently building or recently built, homes we were shown during the time we were looking to buy, touring homes during the Parade of Homes, etc for ideas. We must have changed things back and forth 100 times in the planning stage. Now we are 4 months into our build and about 2 months out from completion. Of course there may be a thing here or there I would do differently next time, but overall I think the home is going to work extremely well for us. It seems like it will be a perfect fit for our family. There may be some things that we see after moving in would have worked better. I can't comment on that yet. We are contracting our own build so we have complete control (and headache!!!) of every sub that is hired and every finish chosen. It's been exhausting and some days just downright draining, but we are nearing the finish line and I can't wait to actually live there. I can see where there is a definite advantage to not building your first home, but it's not impossible. I think the best thing to prepare is walk through as many homes as you possibly can before finalizing plans. You really do have to imagine where you will put every single thing down to pots and pans, extra linens, seasonal decorations, wrapping paper, hiding places for surprise gifts, dropping keys/mail, etc. A lot of preparation goes a long way.

We bought 2 'pre existing homes' before and we just finished building our 'retirement home' (hopefully we'll never move again!). I always said I would never build a home but we had a lake lot passed down through the family and we wanted to live there. The old lake house had issues so we wound up building.

Buying an existing home is definitely cheaper and less stressful (in my opinion).

But when you build a home, you can decide the colors, finish, etc. -- for better or worse. There are a LOT of decisions about every little detail and I found it very stressful. But, I got the stuff I wanted and liked and not what was 'popular' or trendy right now.

One thing I would recommend if you build -- take pics of things through out the process at various stages a long the way. It is helpful to document things and when they happened. We currently have a problem with the hardwood floors and luckily I have pics of stuff to prove the hardwood floors were installed prior to the wet trades (plumbing, tile, painting, etc.). In retrospect, I wish I had more pics. I also wish I was 'on site' more than the weekends to monitor things.

Overall -- trust your instincts. If you're not sure or it doesn't fell right -- you're probably right. :)

aleleux, I disagree. I don't think there's any amount of research that can make building your first home a good idea.

I have been interested in homes most of my life. When I was a teenager, I wanted to be an architect. My mother was a real estate agent. I saw a lot of houses. I have been analyzing peoples' homes since I was a little kid. Knowing what was possible, and what I wanted has never been a problem. And yet, when I bought my first 2 houses, things I thought I wanted were never used. It's not about the ability to think about how things can be or will look. It's about realizing how reality of the house fits the reality of your family. And it's one thing to buy a house that already had things that ended up being a dumb idea, it's a completely different situation to spend extra money and time building those rooms that end up being a dumb idea.

Now, in some situations, having spent a premium for stuff that didn't really work in reality isn't a big deal. You may lose money, but if it's money you can afford to lose, and you're generally happy, then it's not the end of the world. And you could argue that the money was spent on the experience, which is not necessarily wasted. I think it's still a better idea to wait until you've got a little more experience before diving into the world of custom builds.

I should also add, that you could be building your 50th house, and still make mistakes. But you'll make less than on your first one, plus, you'll have equity from having owned previous homes that will help fund the build.

The success, or lack of success in building a house that you're happy with also depends a lot upon the individuals involved. We've been perfectly happy in every house we've owned, and never bothered to sit down and list the things that were wrong with each house. Other people seem to never be happy, and look for the negative in everything. Some see the glass as half empty; some see it as half full; I'm just happy to have a glass! For whatever reason, we're easily satisfied, I guess.

Where we draw the line is at shoddy workmanship, and it seems to be an epidemic in the building trades. I can't believe the number of stories I read here about all of the screw-ups and problems people have in getting expensive, custom homes built. I almost wish I'd kept a list of them to show the naysayers that have told me that you can't design/build/plumb/wire/HVAC a house yourself. Anyone planning to have a house built would be well advised to learn all that they can about the entire process, and plan on watching the whole thing like a hawk.

It was certainly a good idea for us given the market here. Our pre-appraisal on the plan was 40K more than we should finish at. We used the exact finishes the appraiser spec'd the home on. Plus we added an outdoor kitchen and second fireplace, which should help in final appraisal. We couldn't buy a home here for what we are spending and get the space we are getting, laid out exactly like we want. Houses are barely making it on the "official" market before selling here. We bought the land at the start of the development so the value of that has already gone up. It was a great move for us. It may or may not be our forever home. I'm certain if we build again that we'll tweak things. No house will ever be absolutely perfect. I'm not seeking perfection in a home though. Too much more to life for me. Maybe that's where it differs for people...expectations and priorities. Regardless, I'm not sure you can make a blanket statement to say it's never a good idea because it truly does vary so much. Regarding budget, we are at the end and given there's no catastrophe right here at the end, we will finish less than 10K over budget, but we started with a reasonable, well-researched budget. I'm just adding my 2 cents. That is ISN'T impossible. Yes, it is a ton of work. Especially acting as your own GC. Not as much work as Mushcreek though. :)

I think it also depends a lot on location. We live in small town in Wisconsin. We found a local builder and I designed my house on Microsoft word first and he gave it to his draftsman who drew it up to code for 100 dollars. We got our land for a low price due to it being part of an estate. We've only owned one house before. It was stressful and it did take A LOT of extra cash for the construction loan and a few overruns (around 7k). Now that we have lived here a year, it is still the best decision for us. We built what we wanted and for less than most of the houses that are selling around this area and with a different floorplan. I'm sure most people probably thought we were crazy but we've lived in this area our entire lives and we had both sets of parents that have built before us.

The laws of market forces dictate that it would be extremely unusual for it to be cheaper to build than to buy. Whenever that happens, you get builders building more, because there's lots of room for profit. The more people building, the more demand on labour and materials, so the cost of building goes up. Also, if it's cheaper to build, you'd have everyone building instead of buying, and the price of resell would go down until it's no longer cheaper to build. You may get bubbles where the build cost is lower because the market hasn't adjusted yet. But it's irresponsible advice to give others in other areas that they can save money by building.

Economies of scale also dictate that you will always pay more to build a one-off house vs a tract home, or even a few of the same model. You save right away on having the drawings done. And buying a truckload of lumber will cost less per board than a single pallet. Plus, contractors get better pricing because the supplier knows he represents a lot of potential repeat business. Sometimes he shares those savings onto the homeowner, sometimes he keeps those savings as part of his compensation for his work. If he's passing on the savings, you still need to pay him.

I think for 70% of people, buying makes the most sense. Easiest to get a loan, you really don't need a whole heck of a lot of knowledge, your risks are quite low and you know exactly what you're getting.

For 30% of people, they want something "new" or "different" and they should build.

Of those 30%, 60% should "build" with a spec builder and make choices out of 3-4 things in a catalog. A lot of people struggle when there are too many options.

30% of those people should custom build with a builder. They know what they want or can hire someone to tell them (interior designer). They want something unique or have specific needs to address. They're willing to take on the headache involved in obtaining it, or have the finances to deal with whatever occurs. These people have the time and money available to really invest their time and energy into a custom build.

The last 10%, are crazy. They will DIY their house. THIS to me is "building your home". Hiring someone to build is not building a house. My biggest pet peeve. Here, the stress and frustrations are through the roof, the risk is enormous, the banks won't trust you, the financial reality is hell. But you'll save money, have something custom, be proud of what you accomplished.

The question for you, is where do you fit in, and what are you willing to live through?

Me, that's a great assessment.

I'm not sure where I fit, though. I have been acting as the GC. I hired the architect, applied for the permits, contracted the excavators, called the "call before you dig" people and met them on site to get the paperwork so the excavators could start... I haven't really done much "building" myself, though. I've pre-painted some siding. I may be doing the tiling. But otherwise, I make phone calls and write cheques.

What level of crazy am I?

We are pretty much the same. Mostly making phone calls, but doing a few DIY projects. It's a lot of coordinating, but we saved tremendously. People think you save a lot with contractor pricing, but we were able to get contractor pricing for all of our lumber through the place we used, all of our plumbing fixtures, and even some appliances. We've negotiated rates with most subs. Everything is negotiable. I think in my area it is currently cheaper to build. Only because we have huge plant expansions going on that created thousands of jobs. Lots of people need immediate housing. They are even having to build lots of temporary housing and RV parks for workers. It won't stay that way, but homes are flying super fast right now.

I'll take crazy- I've been called worse! I haven't really had any stress or frustrations to speak of, other than waiting on weather conditions. I didn't consider the risk to be enormous, either, but then if I did, I wouldn't have embarked on this venture.