I shared some big news a few days ago. My wife and I are building a new house! We are so excited but also nervous because this is a huge step for us, both for our finances as well as for our marriage and our family.
A lot of our friends and family want to know “why?” Why build a house instead of buy an existing one? Why not wait until your first child is born? Why are you getting such a big house?
The answer is we don’t know. We didn’t really think about any of that.
Haha just kidding.
Here are some answers to the most common questions we are being asked.
Why Build Instead of Buy?
This is a really good question, and after a lot of thought we decided to build our next house because this is going to be our forever home. My wife has literally been looking at houses online almost every day for the last two years, and in that whole time she only found one or two she was truly excited about.
We told ourselves that we didn’t want to jump from house to house, upgrading every few years to something a little bit closer to our dream house. We decided that we just want to do this once, and we want to do it right.
In building this house, we are able to customize everything from the countertops, hardwood floors, backsplash, carpet, and a whole lot more. We can customize the cabinet exactly how we like them. We can truly make this our dream home.
Not to mention the fact that the layout of the home we are building is exactly what we are looking for. While there will be some compromises on the finishings, this will essentially be our dream home right from the start.
Why Buy a House Now?
There are so many reasons we jumped at this opportunity now I always forget at least one when I’m talking to someone in person. I will try to remember them all for you guys.
- Interest rates are low today. I can’t tell the future but I believe they are going up based on the Federal Reserve’s decision to stop quantitative easing. Rates have already gone up since that announcement. I’d much rather get my forever house now at 4.125% than wait a year and get it at 6.25%. Unfortunately when you build you have to wait until the house is almost done before you lock your rate, which was the hardest part of building instead of buying
- Let’s add a few bullets about price. The prices literally went up $10k the day after we signed the contract. We knew we had to get in before the price increase.
- There are only a few lots left in the current phase. In the next phase, each lot will cost at least $50k more. The neighborhood we chose is selling like crazy and prices are going up.
- Speaking of the next phase, it’s a weird situation where the next phase is actually in a different county. If we had waited until the next phase, we would have to pay about 0.4% more per year in property taxes.
- Finally, our current house is not laid out well to have a baby. We are hoping to start our family soon, and in our current house the nursery would literally be as far away from the master bedroom as it could possibly be. We needed a layout conducive to having a baby, so we needed a new house.
Why Buy at the Top of your Budget?
There’s no question this house is at the top of our budget. Why make your house such a large chunk of your budget? It’s a darn good question, but I believe we have some darn good answers.
- It’s gonna be a bit of a challenge for us right now. However, my career trajectory is not flat. I know that I can work my tail off and earn a promotion in the relatively near future. And I can get another promotion from there. I’m darn good at what I do and my salary “tomorrow” is going to be quite a bit higher than it is “today”.
- With a fixed rate mortgage, as my income increases, the cost of my house stays the same. The house will go from the top of our budget to fitting very comfortably in our budget in a relatively short amount of time.
- I truly see this house as an investment as well as our forever home. It’s in a very desirable location and as you can tell by the fact that prices are already increasing by $60k in the next phase, there’s a really good opportunity here to build a lot of equity in this house.
- The whole reason we did a 2-week trip in Europe a few months ago is because we wanted to travel before we devoted our money to our new home. Sure there are other places we want to travel one day, but we are at the point in our lives where we are ready to put our money into our home and our (hopefully) future children.
We are Going to Love our New Home
The bottom line is that we are going to raise our family in a wonderful new home that is customized to our style. It is also, in my opinion, a great investment and will give us so much equity in the home after a few years that we can have a lot of financial freedom if we choose to sell and cash out on the equity we’ve built.