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Build It Today! Five Reasons You Can't Afford Not To

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Build It Today!
Five Reasons You Can't Afford Not To

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Christina Farnsworth is a freelance writer based in Tucson, Arizona. This column appeared in Best-Selling Home Plans from HOME Magazine.

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So you've found a home plan you like and good property to build it on, but you still haven't started construction. If you've been see-sawing on the topic of when to begin, listen up: If you want to build cost-efficiently, the best time is now. Following are five reasons to prove it.

1. Low-Interest Rates Allow You To Buy More House For The Same Money. In early 1998, mortgage interest rates dipped below seven percent, a financial climate unheard of since FHA/VA rates were 6.75 percent in 1969. Will it last? Lending experts say chances are good, which means great things for new home construction.

According to the U.S. Department of Commerce, Bureau of the Census, the average sales price in 1996 for a new 2,125-square-foot house was $166,200. To buy that house using an 8.5 percent, 30-year fixed rate mortgage and a 5-percent down payment, you had to earn $70,000 annually to qualify. Today, with the mortgage rate near 7 perent, qualifying income decreases to $60,000, says Tucson Mortgage loan officer Frank Eliopoulus. The low rates qualify you for a higher mortgage with the same income. For those who need to sell an existing house before they build, the rates can make the sale easier, since more buyers will qualify.

2. Build Now For Lower Utility Bills. Most new houses are built to strict insulation standards with efficient heating and cooling equipment. As a result, these energy-efficient structures typically have much lower utility costs than older homes. Before you build, find out if your local utility sponsors an energy certification program. These programs require the homeowner to build to strict standards, but in exchange, you could save even more money. For example, Arizona's Tucson Electric Power Company (TEP) has a Heating, Cooling and Comfort Guarantee certification program that estimates and guarantees heating and cooling costs. If your costs exceed guaranteed estimates, TEP refunds the difference.

3. Now Is The Time To Find The Right Lot For The Right Price. For every month you wait, another person will put a house on a good lot. Valuable lots--those that are easy to build on in desirable locations--are becoming scarce in some densely populated areas around the country. As competition for property increases, the homeowner may have to shoulder additional expenses.

For example, prices for desirable lots have risen some 30 to 50 percent in the last two years in the popular Tucson market, says Michael Wachs of Wachs Construction, Inc. For that reason, some homeowners are being forced to build on more difficult sites, such as those that slope or have rock or unstable soils. Building on that type of land could mean additional site preparation and extra foundation work. "The materials and labor can add as much as $15,000 to the cost of your new home," says Wachs. Moreover, the additional costs won't improve the house's appearance. In fact, difficult sites may limit your home design choices.

4. Save On Insurance. When built to the latest fire, health and safety codes, new houses are safer and insurance companies recognize this when setting premiums. For example, many new building codes require wired-in smoke detectors and ground-fault interrupting circuits in bathrooms and kitchens. New houses are also free of such hazards as lead paint and asbestos. As a result, says Jeff Makiri of American Family Insurance, "premiums for a new house can be as much as 20 percent lower than those for a seven-year old house."

5. A New House Better Protects An Investment In High-Tech Household Equipment. These days most households have at least one computer, and home theaters with fancy television and audio equipment are on the rise, as are home security systems. We want whole-house surge protection, as well as cable and telephone outlets in every room. What does that have to do with new construction? Think what it would cost to rewire your existing home. "Three to four times as much as wiring a new home," says Brian Hills of Westar Contract Kitchen & Bath Corporation in the Southwest. A new house also presents the opportunity to maximize the design and comfort of your home office or theater.

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