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11 May

When It Comes to Building a New Home, Timing Is Everything

building a new home: buy first or sell

It’s no secret building a new home comes with plenty of decisions including selecting the perfect homesite, home design and front elevation. Then comes making interior finish and feature selections, such as lighting, countertops and flooring, or structural changes for flexible living spaces – and that’s just the beginning. Or is it?

Before such decisions can be made for a new home, many homebuyers have an important decision to make that will directly impact their lives during the construction of the new home: to sell their current home now and live somewhere else in the meantime or sell the current home only once the new home is complete.

The answer depends on several considerations, not the least of which is comfort over risk.

The Big Risk: Paying Two Mortgages

Perhaps the riskiest move financially, yet the easiest from a personal standpoint, is to stay within the current home while the new home is under construction. This way, the entire family can remain in the comforts of home and kids in their respective schools until moving day. Additionally, certain elements only have to be done once, such as address changes, service provider updates and moving in general.

However, while continuing to pay the mortgage on the current home, homeowners will likely need cash to place a down payment on the new home. Depending on the construction loan structure, homebuyers may need to start paying on the new mortgage as draws are taken to fund the building of the new home. When the time comes to take full ownership of the new home, there will be two full mortgages to pay until the existing home sells.

Less Risk but Inconvenient: Moving Twice

Selling an existing home before buying a new home will likely free up extra cash to use toward the purchase of a new home while also avoiding paying two mortgages at once. This also means finding somewhere to live in the interim at an added expense. Unless friends or family can lend the extra space, short-term options include leasing a storage unit, paying rent and paying deposits for utilities and services at the transitional location.

There is also the time and trouble of moving twice and going through the hassle of setting up services and making change-of-address arrangements in relatively quick succession. The ideal place for many families accepts pets and allows the kids to remain in the same school district or puts them within the new, future school district early – and that is not always easy to do!

Weighing the Options

Before making a decision, consider having at least three conversations: First, talk with the builder about different options they see their buyers using and how those have worked out. Get a realistic view of construction timing and any cash needed during the process, if any.

Next, have a chat with a real estate agent who is knowledgeable about the sales market in the current area. Find out how long it is typically taking homes to sell, any expenditures that may be needed to get the current home ready to sell and average sales prices of comparable homes in the area.

Finally, talk with the lender. They may offer financing options that will make the decision easier. For example, would a cash-out refinance on the current provide the money needed for a down payment on the new home without having to sell first? Is an adjustable-rate mortgage an option for the new home for a lower initial interest rate and payment while the existing home is on the market?

Choosing to build a new home requires numerous decisions from the very outset but taking the time to review all options helps find which specific avenues will make the process as comfortable as possible for each unique situation and think of the payoff – a brand-new home with personally selected features and finishes.

Explore new home opportunities from SR Homes throughout Clarke, Cherokee, Forsyth and Oconee counties by visiting www.SRHomes.com/communities.

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