I Saved $150,000 by Adding Onto My Home Instead of Buying New. Could You?
- Adding onto your home has its limitations, but it could save you quite a bit compared to buying or building new.
- The housing market is always changing, so what makes the most sense for you could change over time.
Your dream home doesn't always have to be built from the ground up.
In the spring of 2020, with a baby on the way, my husband and I knew it was time to do something about our home. The tiny two-bedroom starter home we were living in was already cramped and we knew we'd soon need a lot more room.
While we briefly considered buying or building a new home, we ultimately ended up adding onto our existing home so we could keep our spacious property. Money wasn't our only consideration, but we ended up saving a boatload by going this route. Here's how.
Buying a new home isn't always better
Buying new enables you to design your home exactly how you want, but it often comes at a high cost. This was especially true for us early on in the pandemic when the supply of homes for sale in our area nearly dried up. The houses that were for sale weren't what we wanted and prices were climbing quickly.
Building a new home was also a possibility, but we knew that probably wouldn't fit within our timeframe. Plus, we could've easily spent $500,000 or more on the home we wanted. Pandemic supply chain issues were already starting by then and it wasn't too difficult to foresee the price hikes on the horizon.
So eventually, we decided to add onto and remodel our existing home to give us a little extra room without all the work involved in a brand-new build. We already had a well and electricity, so we didn't have to worry about paying to have these added. Plus, we lived in the house at the time, so we weren't paying to maintain two properties.
We also took care of a lot of the finishing work ourselves. My husband is pretty handy and we had help from friends and relatives as well so we didn't have to pay someone to do this for us.
In the end, we saved about $150,000 by choosing to add on rather than build new, and we ended up with a finished product much sooner. We had to make some sacrifices with the layout, but all in all, it ended up being a good move for us.
Is adding onto your home the right decision for you?
Just because adding onto our home was the right call for us doesn't mean that'll be the case for you. We were fortunate enough to have a large property that gave us plenty of room for an addition, but others may not have the space necessary to do this.
And adding on might not be cheaper in every situation. The only way to know if it's the right call for you is to get quotes from a few contractors and compare them to the cost of homes available for sale in your area. If building new is on the table, be sure to talk to the contractors about your plans for an addition and a new home so they can give you accurate pricing information for each option.
If you're not sure what your budget is, talk to a mortgage lender to find out. Once you know what you're pre-approved for, you can begin to figure out what's feasible for you.
Given the record inflation we're seeing right now, you may not be able to afford the home you want immediately. But that's OK. There are already signs that mortgage originations could slow this year, and that lower demand could lead to a decline in prices. What you want to do may not be feasible right now, but if you give it even a few months, you may find that changes.
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