Buying vs building a home
Home Loans & Homeownership

Buying vs. building a home – four elements to consider.


Ready to take the next step of buying a home?

There can be so many decisions and questions. ‘What’s best for my family and lifestyle?’ ‘Is there one kind of mortgage?’ ‘Is building better than buying?’ The list can go on, but lucky for you, Advia can help sort it out.

Element 1: Typical Process

The home buying process can take some time, especially if there are unforeseen obstacles (the home inspector said there’s what in the attic?!), but there are vast differences between the process of buying vs. building a home.

Steps for buying a home:

  1. Get pre-qualified: Sellers typically like to see that potential buyers are serious about purchasing a home. Before you start your search, get pre-qualified for your home mortgage loan. That way you’ll know your finance options from the beginning. Plus, it’s currently a sellers’ market, so if you aren’t pre-qualified when you find the home of your dreams, you might be too late.
  2. Start the search: This is one step that can become time consuming if you are having difficultly finding the home with the features and location you want.  Make sure to research your new community to find the best fit for you; some common items include crime rate, school district ratings, and community amenities such as restaurants or shopping.
  3. Make an offer: Once you find the home you want, you’ll need to get your offer approved by the seller. Sometimes there are multiple offers on the table or the seller wishes to negotiate items in the offer such as price, closing date, and contingencies. If your offer is rejected, you can either increase your offer price or go back to step 2 and continue the search.
  4. Home inspections: If your offer is accepted, then you need to schedule a home inspection. Have the home, well, and septic (if applicable) all inspected to ensure they’re in quality condition. If the home passes all the inspections, you’re on to step 5. If large issues are discovered or the seller is unwilling to negotiate repairs, you may need to head back to step 2.
  5. Closing: Time for the final steps of purchasing your new home! In order to close and take possession of your new home, you must complete the application process. In step 1, you were pre-qualified, now you must get approved for the amount and term of the requested mortgage.
  6. Make it your own: Once you’ve purchased the home, you can make alterations such as renovations, painting, decorating, and more to make the house your home!

Total time = Average around three months from pre-approval to move in.*

Steps for building a home:

  1. Pre-approval: Same as buying a home, you still need to secure financing for your home building project. With a One-Time Close Construction Loan, you close on your loan when construction starts, receive five draws (loan payouts for purchases and contracted payments for the house) during construction and the loan automatically converts to a mortgage upon home completion.
  2. Find the land: Get with a realtor or search on your own to find the land where you’d like to build.
  3. Find an architect or builder: Options here would be either a semi-custom home (a home built as part of a development with a set palette of finishes and upgrades to choose from) or an entirely custom built home.  
  4. Design your home: With an entirely custom-built home, the next step is to choose every aspect of the home’s design. This step can be daunting for some new home buyers as you need to decide every aspect of the home from the roof down. Your home builder will be able to provide ideas and samples to assist you.
  5. Completion: Your home is done! Your One-Time Construction Loan will automatically convert to a fully amortizing Mortgage Loan. You move in to your new home! No need for emergency paint jobs or redecorating, your home is exactly how you want it!

Total time = Average six – nine months from pre-approval to move in*.

Element 2: Customization

Both buying a home and building a home provide some level of customization. For an existing home, you can repaint, decorate, and change the flooring, light fixtures, and other aesthetic features of your home. Later on, if you have equity in your home, you can take out a HELOC and make structural changes or kitchen upgrades, but this takes time (on average 1 – 10 weeks) and require various permits. For a new construction home, the customization happens during the construction process, not after you move in. The concept of designing every aspect of your home can either be stressful or exhilarating depending on your personality. Either way, your home will be totally customized to your preferences, needs, and lifestyle.

Element 3: Modernization

For all you eco-friendly folks out there, this might be a point of discussion. Is it better to save energy and choose an existing home or build a home that requires less energy for the long run? For existing homes, there is the initial energy saving due to the fact there aren’t any additional resources consumed when the house is built. In other words, you’re recycling a vacant or for sale home, instead of buying new materials to build a new home.

A new home, however, can provide long-lasting energy savings when more efficient materials ( i.e., better insulation) and appliances (i.e., energy star HVAC) are used. You even have the option of solar power panels or other green innovations not available for some existing homes.

Element 4: Price

A new construction home can cost between 20-50% higher than a similar pre-existing home**. But this does come with a caveat – the cost is higher up front, but may even out when you figure in the lack of maintenance costs found with pre-existing, older homes. New construction homes have all new materials and appliances as well as a 10 to 25-year home warranty. Pre-existing homes, depending on age, can have multiple repairs required which could end up being quite costly. Consider this, the average furnace lasts about 20 years and costs $4,000; the average roof lasts about 25 years and costs at least $5,000***.

Whether you’re looking for an old home with charm and character in an already settled neighborhood or a home designed specifically for your lifestyle in an up-and-coming neighborhood, we have you covered with our partner, Mortgage Center. Learn more and apply online at

We do business in accordance with the Federal Fair Housing Law and Equal Credit Opportunity Act. Some products and services may vary based on geographical region. Offer and rates subject to change. Subject to credit approval. Advia Credit Union is an Equal Housing Lender. All loans subject to approval. Rates and promotional offers effective March 15, 2019 and subject to change.