If you're considering buying an existing home: Location is often one of the most crucial factors in any real estate decision, as it significantly impacts your property's value and your family's quality of life. When buying existing homes, you'll want to research access to amenities, good schools, community safety and other factors that affect future appreciation. You'll also have the advantage of seeing exactly what's available in established neighborhoods.

If you're considering building: Location also drives supply and building opportunities. A smaller inventory of existing properties in highly desirable areas may require you to either compromise on features and design — or look for either an empty lot or a property in disrepair that could be razed to build your new home. Consider whether suitable lots are available in your preferred neighborhoods and what restrictions or covenants might affect your building plans.

If you're considering buying an existing home: Purchasing an existing property offers the fastest path to homeownership. New owners can typically move in within a week or two of closing. While you'll still need time to research properties, schedule viewings, and conduct inspections, the overall timeline is much more predictable and significantly shorter.

If you're considering building: Custom building requires substantial time and bandwidth to manage an incredibly complex and time-consuming project with multiple moving parts and dependencies (including design, materials and vendor choices). A new home built by a developer without a specific buyer in mind will significantly reduce these time challenges but will likely require that you make some customization trade-offs. Plan for construction timelines of 6-12 months or longer, depending on complexity.

If you're considering buying an existing home: When you purchase an existing home, you assume more risk regarding maintenance and repairs. The potential for unexpected major repair costs increases (such as a leaking roof or a faulty heating/HVAC system), especially with older properties. According to an October 2023 U.S. Census Bureau study, most experts recommend budgeting around 2 - 4% of an older home's value for annual maintenance. You'll also need to factor any necessary renovation costs into your budget if the existing home doesn't meet all of your family's needs.

If you're considering building: When everything in your home is brand new, there's little immediate concern regarding repairs or maintenance. Additionally, your builder's warranty should cover the cost of any defects that arise during the first year. Experts recommend budgeting around 1% of a new home's value for annual maintenance — significantly less than older properties.

If you're considering buying an existing home: The purchase price of an existing home is generally much more fixed and predictable upfront. However, in highly competitive marketplaces, all-cash offers in excess of the asking price have become relatively common. Additionally, older properties frequently require moderate or extensive outlays for updates and renovations. Competition for properties is also resulting in fewer buyers requiring pre-sale inspections — despite the potential for unforeseen repair costs.

If you're considering building: Building a home comes with inherent cost unpredictability due to material price volatility, labor shortages, and potential delays. You'll need to accept a degree of uncertainty associated with building costs. Factors such as inflation, tariffs on key materials like timber or steel, and even unexpected global events can cause costs to escalate. Land, lumber, concrete, drywall and even copper piping and wiring have all become more expensive. Cost overruns are virtually inevitable given the long-term horizon between initial planning and construction completion.

According to the most recent survey by the National Association of Home Builders, the average cost to build a new single-family home (including land) is $644,750.³ For comparison, the current median sales price for an existing home is $404,400.⁴ That's a substantial 37% cost differential — which makes buying and renovating a potentially more attractive financial option than building from scratch.

If you're considering buying an existing home: Traditional mortgage financing for existing homes is straightforward and well-established. You may also want to explore alternative financing options.
 

• Loan Management Account® (LMA® account) offerered by Bank of America, N.A.⁵ — maintain your current investment strategy while using your investments as collateral to access funds for your home purchase
  
  
• Home Equity Line of Credit (HELOC) — leverage your existing property's equity as collateral for a flexible line of credit to help fund a new home.
   

If you're considering building: Construction financing is more complex and typically requires stricter requirements and timelines. Bank of America's specialized construction financing solutions include:
 

• Lot Loans — designed to finance the purchase of a residential lot for future construction⁶
  
  
• Construction-to-Permanent Financing Program — offers the advantage of a single closing cost for both construction and permanent loans, with interest-only payments during construction⁶
  
  
• Builder Rate Lock Advantage® — allows you to lock in your mortgage interest rate for up to 12 months during construction,⁷ with a one-time float-down option if rates improve⁸
  
  

Keep in mind that most lenders will require you to own the land outright before providing construction financing. Additionally, construction loans often require you to front project costs out-of-pocket before the lender disburses funds upon completion of work phases.