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I am in Omaha, and things are relatively inexpensive here compared to the rest of the country. We planned for $150,000 but that doesn't include the friends that will do stuff for us for nothing, which would prob run another $50,000 if we didn't have them.
At least where I live, you need more money down to build a home than buy an exisiting one. This is the fifth house I have bought - I move a lot for work and I have built and bought existing ones. Most builders require 20% down in cash before they will start building and I even worked with one who had incremental payments as the building progressed to essentially 40% down. Keep in mind this was seven years ago when the real estate market was hot and demand was much greater than supply for new construction.
When buying an exisiting home if you don't have 20% down in cash most mortgagers will require that you get PMI - primary lending insurance which adds about 2 -5% to your monthly payment and protects the lender if you fault on your mortgage.
By no means am I a financial advisor and I would definitely encourage you to go talk to one but sharing my experience since I have purchased and sold too many houses.
@tksjewelry: I'm just north of you in Minnesota, so houses here aren't very expensive (with the market now, 2000 sq ft homes are selling for about $130,000). And I live outside the burbs, about 45 min from downtown Minneapolis, but it's far enough away that land/houses are cheap. So I might be able to build for close to $150,000 but I'm thinking if we tried that, we'd have no upgrades at all - basically level 1 type stuff. And there are some things I would really like to see high-quality in.
@mooreofthat2: I was thinking around the 20% mark (I know you can purchase a house for less, esp. with an FHA loan) for building, but 40% - wow! That will take some saving for sure :) thanks for the info.
I don't know about other states, but friends here in MD looked into buying a lot and building on their own (in other words, not building within an existing development), and they were required to own the land outright (no leins) before a building could be constructed on the site. They would have spent years owning an empty plot of land just so they could pay it off before ever breaking ground on their home. So you may want to check into the requirements in your area.
I'm in Ohio and we bought our land first and had no money down. There were things we paid for with cash like electricity lining and hookup but in total we built our home for $165,000. With 5 acres and an after building appraisal, we can sell it for at least $235,000.
Edit: To help, my home is 2300 square feet, 4 bedrooms, 2 1/2 baths with basement to be finished and 2 story. Plus we have all upgraded flooring, faucets etc.
We looked at both options when we purchased our home (both are within a subdivision). The main difference we saw was that on top of the down payment you need you most likely have to come up with the closing costs on your own as well. However ,if you purchase a purchase a home from an owner you can usually have them cover that. For us it didn't make a big difference, but our house is only 2 years old and we got it for less than we could build it for.
I think it depends on the area and where you are building, but there really shouldn't be unexpected costs associated with it unless you add upgrades later on. Usually, you go into a contract on the floorplan and lot prior to making all of your selections (which can add up).
We built with a company and we put 3.5% down on our build as an FHA. The really nice thing is that our builder allowed our deposit, application fees, upgrade deposits to be part of our down payment. These were all done over the course of 6 months so it didn't seem too much like a hit in the wallet.
I haven't built my own home but I am surrounded by everyone in the construction business so I hope to be able to soon.
Our biggest issue is land. Is land expensive and/or hard to find where you live? It is generally less expensive to build your dream home than buy if you can get the land. DH and I dream and would like a 5 bedroom + office, media room, granite in kitchen, etc. And for a 4,000- 5,000 sq foot home it would be about $350k to build. The last for at least an acre starts at about $500k where we live. But that's just our dream lol
Oh my word @roxy821; where on earth do you live that an acre of land is that high?! We live in a suburb of Columbus where land is more expensive but our 5 acres is worth $60,000. I couldn't imagine spending that much on that size of land. DH and I are looking for land for our future home which is in the 100 acres range and it still doesn't come close to that. :(
@MissGreen: My hubby and I hope to build a home someday, but where I live in NJ, an acre can run $160,000! I mean holy cow! I would love to get a 5 acre lot for $60,000! We seriously are living in the wrong place! lol
@lovekiss: really?! I have NEVER heard of that, I'll look into it though.
@roxy821: No, land is definitely not expensive here. I mean in certain parts of the state yeah, but where I am I could find 5 acres for less than 60k, or a 1 acre lot for about 20k, sometimes less depending. and that is CRAZY!!! Where do you live? I'm in Minnesota, in the burbs.
@MissGreen: good ol' midwest! Sounds like our prices :) yeah, I lived on Long Island for awhile and learned to never complain about prices here anymore!
@MissGreen- I live in the suburbs outside of Boston. Everything is more expensive here! We always comment how rich we would be if we lived in another part of the country lol.
@shimmerofheaven- I think we have to move to where Mrs. Green and Miss Spunkin live.
@miss-spunkin- Good luck on the housr building and I'm glad to hear your prices aren't as expensive. While you can't compare the prices in the northeast to the midwest, it is generally less expensive to build a house than to buy. For example our dream house will cost us somewhere around 850k to build including last and that house would be about 1.5 million to purchase.
@roxy821: well we probably won't be able to build for at least another five years, we have a lot of saving to do! But I love looking into it, already have a few house plans in mind that I found on the plan collection!
Yeah, I said earlier, I lived in NY for a year and was shocked at house/land prices. But, you kinda get what you pay for. It's gorgeous out there, there is so much to do, it's close to everything, etc. Here, we're in the middle of nowhere, close to nothing.. :)
@Miss-spunkin- You made me start daydreaming and looking at land for sale in our area... someday lol. Since DH wants four kids I told him after two he needs to build me my dream house.
wow. all of your land prices sound phenomenal to me. in vancouver (canada), the average home goes for about 600k (including apartments/condos), and to get a house, you're looking at 1-2M to get a decent place. and that's mostly due to the cost of the land; a lot of people who can afford to buy out here follow up by tearing down the existing house and then replacing it with a new one :S
@starbuckslover: I'm also slack-jawed reading about how cheap you can build for in the midwest. $500K for an acre is not unheard of out here...
If you are that concerned with land costs...never come to Vancouver. It's the most expensive place to live in Canada, with a small townhouse running you a little over a million dollars. I haven't looked at land within the city, but about an hour out of the city an acre will be around $200,000
ETA: Just noticed that starbuckslover already said pretty much the same thing! My mistake.
Holy shit, how come building is so inexpensive in the States?!
In the area I live in in Canada it's hard to find a re-sell for under $400K!
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My husband and I were in the home-buying process for a little while, but stopped as it was getting too close to my EDD and it was getting stressful and we didn't feel ready anymore.
Anyhow, the more homes I look at, the more I want to just build my own house. We don't have hardly anything saved for a house (another reason we stopped looking), so I'm trying to get an accurate picture of building a house vs. buying one.
If you wouldn't mind sharing how much you had saved to build your house? I think if we build it would cost somewhere in the $200,000-$250,000 range. But we wouldn't be able to afford that for awhile.
Thanks bees!