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Shopping for a car: fun, freeing, and full of fresh new smells. Shopping for a puppy: heartwarming and full of suspicious smells. Shopping for a mortgage: not particularly thrilling or fragrant but one of the most important decisions many consumers will make in a lifetime.

From assessing what they can afford to nailing down a mortgage type, researching the best rates, and ultimately securing a loan, homebuyers must take many steps when shopping for a home loan.

Here are a few tips and tricks on how to shop for a mortgage loan and what to expect along the way.

How to Shop for a Mortgage Lender

In order to obtain a home mortgage loan, a buyer first needs a lender. You might work directly with a financial institution, or you may find a mortgage through a mortgage broker (more on that later). Before you can research these options, you’ll need to have a sense of what you can afford to buy and borrow. Start by figuring out how much you might spend on a home and roughly what portion of that you will need to borrow.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

Figuring Out What’s Financially Possible

Reviewing monthly spending and estimating how much they can afford is one way for mortgage shoppers to kick off the home-buying process.

A budget or worksheet can be particularly helpful in determining what’s possible, with line items for the mortgage payment, property taxes, insurance, utilities, maintenance, and funds set aside for emergencies.

A mortgage calculator is useful for estimating the real cost of a home purchase, allowing consumers to plug in and play with the factors that influence a monthly mortgage payment:

•   Loan type

•   Mortgage principal

•   Mortgage interest rate

•   Down payment amount

•   Loan term

•   Estimated property tax

•   Private mortgage insurance, or PMI

•   Homeowners insurance

•   Homeowners association (HOA) fees

Most mortgage calculators allow homebuyers to enter their credit score for a more accurate estimate. Checking your current credit score can help you determine what type of loan you qualify for.

In many cases, a higher credit score can help buyers get a lower interest rate, while a lower credit score could mean higher interest rates or the need for a larger down payment.

Knowing this information can help consumers estimate what range of quotes to expect from mortgage lenders or brokers before they start shopping for a mortgage loan.

Recommended: First-Time Homebuyer Guide

Determining the Best Type of Mortgage

Another step to take when shopping for a mortgage is deciding which type of mortgage loan to apply for.

This process could require some diligent comparison shopping to consider the pros and cons of each option alongside financial and personal needs.

Fixed-Rate Mortgage

A conventional fixed-rate mortgage offers the same interest rate and monthly payment for the entire term of the loan — typically 15 or 30 years.

Adjustable-Rate Mortgage

ARMs generally offer lower interest rates than fixed-rate mortgages, but only for a certain time, such as five or 10 years. After that, the monthly payments will adjust to current interest rates.

No Down Payment Loans

A no down payment loan allows buyers to purchase a house with zero money down at closing, except for the standard closing costs.

Federal Housing Administration Loan

An FHA loan is a government-backed loan that allows qualified buyers to put down as little as 3.5% if they meet several FHA loan requirements, including the payment of mortgage insurance.

Veterans Affairs Loan

A VA loan is a government-backed loan that allows no down payment and no mortgage insurance. It is available to eligible veterans, service members, Reservists, National Guard members, and some surviving spouses. VA loan requirements are worth looking into for buyers who fall into one of these categories.

USDA Rural Development Loan

A USDA Rural Development loan is a government-backed loan for families in rural areas who are trying to put homeownership within reach. As long as buyers’ debt loads don’t exceed their income by more than 41%, they can enjoy a discounted mortgage interest rate and no down payment.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Researching Rates and Deals

Once mortgage shoppers have a better idea of their financial bandwidth and preferred mortgage type, they can begin researching the optimum rates and deals they can get on a home loan.

Mortgage lenders and brokers might offer different interest rates and fees to different consumers depending on the day, even when they have the same exact qualifications. That’s why it can be important not only to understand mortgage basics but to compare what an array of different types of mortgage lenders and brokers are able to quote in the loan estimate.

Bear in mind that mortgage lenders and brokers receive a profit from the loan issuance, so they might be motivated to get consumers to agree to loans with higher fees, interest rates, or origination points.

Shopping around for the best interest rates and deals is a proactive way for homebuyers to avoid more expensive loans and ensure they can strike a deal they’re comfortable with.

How to Shop for a Mortgage Without Hurting Your Credit

When a lender looks at your credit history and score—what is known as a “hard” inquiry—and generates a mortgage preapproval, your credit score typically takes a hit. As you shop for a mortgage, you’ll want to instead first ask for a prequalification, which requires only a “soft” credit pull and won’t negatively affect your rating. It’s important to understand mortgage prequalification vs preapproval as you move forward through the process, as there is a time for each step.

Mortgage Lender or Broker?

One decision to make when shopping for a mortgage lender is whether to work with a lender directly, or to go through a mortgage broker:

•   A direct lender is a financial institution that assesses whether a buyer qualifies for a loan and offers them the funds directly.

•   A mortgage broker is an intermediary between the buyer and financial institution who helps the buyer identify the best direct lender and compiles the information for the mortgage application.
Long story short, mortgage brokers help homebuyers comparison-shop by collecting multiple lender quotes and presenting them all at once. This can be helpful for buyers who don’t want to deal with contacting multiple lenders. That said, the broker typically takes a commission, covered by the buyer, based on the mortgage amount.

In the case of working with a direct lender, it can be a good idea for buyers to deal with a financial institution they already have a relationship with.

Questions to Ask When Considering a Lender or Broker

Sometimes a list of questions can be useful when considering whether a mortgage lender or broker is the right fit. Ask prospective lenders the following:

•   How is the lender getting paid? It’s fairly common for a mortgage broker to get paid a commission on closed transactions. Asking them whether the fee is embedded in the loan origination fee or how their compensation will be facilitated can help make these costs more transparent to the buyer.

•   Can they offer competitive interest rates? If so, how long can they lock them in? While mortgage rates tend to be standard across the industry, lender rates can fluctuate based on the buyer’s credit score and financial history. Once the rate is locked in, there’s a guarantee from the lender that they’ll stay the same for a specific period of time, regardless of industry-wide fluctuations. Finding out if the lender is willing to offer the best rate and lock it in for, say, 60 days can help buyers know that they’re covered until closing time.

•   What are the typical business hours? Whether it’s a broker or a lender, finding out their availability can be good to determine in advance, especially since many home showings and offers happen on weekends and could require a tight turnaround time.

•   Can they provide a breakdown based on different down payment amounts? It can be useful for buyers to see a wide range of cost comparisons when shopping for a loan. Can the lender provide multiple scenarios with different down payment amounts, interest rates, and fees so the buyer can have a knowledgeable conversation about their budget and what’s possible?

•   What’s the loan processing time? Asking about the anticipated turnaround time for processing the loan (usually around six weeks) can help determine whether the lender will be able to execute the purchase and sale agreement in time for closing.

•   What fees and closing costs can be expected? Inquiring about expected charges is an important way for buyers to ensure no surprises or hidden transaction fees down the line. From origination fees charged by the lender to cover the loan processing to closing costs such as home inspection and appraisal fees, HOA fees, or title service fees, a loan estimate can help lay out which charges can be negotiated and which ones are fixed.

Understanding Risks, Benefits of Loan Options

Depending on the loan type, Annual Percentage Rate (APR), whether the interest rate is adjustable or fixed, the down payment amount, and potential prepayment penalties or balloon payments, mortgages have many different benefits and risks associated with their purchase.

Working with a lender to calculate how much monthly payments are estimated at the start of the loan, five years in, 10 years in, etc., can help make clear the risks and benefits of certain terms and conditions.

A mortgage worksheet is one way to help illuminate the potential upsides and downsides of a particular mortgage loan alongside the lender.

Negotiating the Best Mortgage Deals

After a suitable sampling of lenders have provided detailed mortgage loan quotes, consumers can compare costs and terms and negotiate the best deal. The mortgage worksheet can be helpful in this part of the process as well.

Being transparent about the fact that you’re shopping around for the best quote can incite lenders and brokers to compete with one another in offering the most favorable option.

Checking With Trusted Sources Before Signing

Once comparisons and negotiations whittle the list of quotes to a few, consumers might wish to consult with reliable sources such as a family member who has experience shopping for a mortgage, a housing counselor, or a real estate attorney to weigh in on the impending agreement. Review the loan documents with a trusted, well-informed source before signing anything.

Since getting a mortgage loan is often considered one of the most expensive commitments many consumers will make in their lifetime, there’s no harm in asking for a little help when making the decision.

Getting Mortgage Preapproval

Once you’ve chosen your mortgage provider, it’s time to consider getting preapproval. While being prequalified for a loan involves consumers submitting their financial information and receiving an estimate of what the lender could potentially offer, preapproval means the lender has conducted a full review of the consumer’s income and credit history and approved a specific loan amount for, typically, 60 to 90 days. This approval usually comes in the form of a letter.

Homebuyers can benefit from getting preapproved for a mortgage in many ways. Not only does it offer them the opportunity to discuss loan options in detail with the lender, but it also helps them understand the maximum amount they could borrow.

In some cases, sharing a preapproval letter with a home seller indicates serious intention to purchase a property. This can prove particularly helpful in competitive markets and bidding wars. Sellers will often go with a preapproved buyer over a prequalified buyer, since it may help the parties get to a closing more quickly.

Shopping for a Mortgage Lender Tips

In a competitive local housing market consumers may feel pressure to line up a mortgage quickly. But it pays to do your homework when shopping for a mortgage. Evaluate your own finances, know your credit score, and then make sure you are aware of the full range of options available to you. (Remember, first-time homebuyers may qualify for special programs.) Keep good records of competing offers from potential lenders or a mortgage broker. Never hesitate to ask about all costs or request clarification of any terms you don’t understand.

The Takeaway

How to shop for a mortgage? First, figure out how much you can comfortably afford, research loan types and interest rates, then compare what lenders offer. Finding the right loan is as important as choosing the right home.

SoFi makes shopping for a mortgage loan easy and you can get your rate in just minutes.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What to look for when shopping for mortgages?

You want to look for a good interest rate when shopping for a mortgage, but you also want to consider the term of the loan and fees that might affect its total cost. A loan with the lowest monthly payment initially may not always be the most affordable choice over the long haul.

Is it worth shopping around for mortgage rates?

A mortgage is one of the biggest financial decisions most consumers will make, so it’s definitely worthwhile to shop around for the best rates.

How to shop around for the best mortgage interest rate?

Shop for the best mortgage interest rate by checking with various lenders to see what rate you might qualify for based on your credit score and down payment amount. Or work with a mortgage broker who will do this research for a fee.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Most people probably expect to use a mortgage to purchase a home, but what if you have enough to pay in cash?

In a hot housing market, an all-cash offer can give homebuyers a significant competitive edge over those whose bids are contingent on getting a mortgage. And who wouldn’t want to avoid monthly house payments if they could?

Does it really make sense, though, to forgo getting a home loan — especially when you could invest the money and potentially earn a higher return?

Cash vs. Mortgage: A Quick Overview

According to the National Association of Realtors®, 28% of home sales in December 2022 were cash deals.

Those buyers undoubtedly had a mix of motivations when they decided to pay with cash. Some people don’t like the idea of carrying a big debt — or paying the interest on that debt. Others might want to skip some of the lending costs and nerve-wracking processes (approvals, appraisals, inspections, etc.) that are required when taking out a home loan.

And, yes, a cash offer can be an attention-getter when there are multiple offers on a house.

But it’s also important to look at the advantages of having a mortgage.

Before you move forward with a home purchase, here are some of the pros and cons of buying a house with cash vs. a mortgage.

Pros of Buying a House With Cash

There are some clear benefits to paying cash for a house, including:

Beating Out Other Buyers

A cash offer can help you compete more effectively with real estate investors who are able to pay cash for properties of interest.

Or you may be able to negotiate a better price with a seller who’s looking for a quick closing. If your seller already had an offer or two fall through because of contingency issues, it’s possible you’ll be perceived even more favorably.

Speeding Up the Buying Process

When you use a mortgage to buy a home, you can expect to spend a few anxious days working on your loan application, pulling together your paperwork, and waiting for the lender’s approval.

Then you’ll have to wait for a property appraisal, a title search, and other steps that let the lender know the collateral being used for the loan is solid.

With cash, you might be able to avoid some of those steps — and the costs that go with them. (You still may want to follow through, though, with procedures meant to ensure that your purchase is sound, even if they aren’t required. Otherwise, undiscovered issues could come back to bite you if you refinance or sell the home in the future.)


💡 Quick Tip: Mortgage loans are available with flexible term options and down payments as low as 3%.*

Buying When the Appraised Value Isn’t Market Value

Paying cash for a house can allow you to purchase a home that won’t appraise for the seller’s asking price (or the price the average buyer may be willing to pay). If you understand the problems and plan to make necessary improvements, you may still decide it’s the house you want.

No Monthly Payment and Fewer Long-Term Costs

With a cash purchase, you won’t have a monthly mortgage payment in your budget, which can feel quite freeing. And you can avoid some of the long-term costs associated with a mortgage, including interest and private mortgage insurance.

Cons of Buying a Home With Cash

Drawbacks also exist when paying cash for a house. Here are a few:

Losing Out on Investing Potential

Yes, if you pay cash, you’ll save by not paying interest, but could you make more money year to year by investing your money elsewhere? If you can lock in a low interest rate on a mortgage, it could free up cash for other purposes, including saving for retirement. (Plus, diversifying your portfolio is recommended in most cases. If you put most of your cash into your house, that’s just one asset — the opposite of diversification.)

Remember, diversification can help reduce some investment risk. However, it cannot guarantee nor fully protect in a down market.

Keep in mind also that if you liquidate assets to help pay for the home, you won’t just lose out on the earnings potential. If those assets have gone up in value since you purchased them, you also may trigger capital gains taxes.

Using Up All Your Cash

If purchasing your home with cash takes a big chunk out of your savings, you might not have the money you’ll need later for unexpected expenses or home improvements.

And if you end up using a credit card for those costs, the interest rate will likely be higher than it would be for a mortgage. The average rate in 2023 is 22.38% for new offers.

Cash Isn’t Always Better

An all-cash offer is a power move, but it won’t necessarily win the day. Though the thought of a quicker and easier closing will probably get the attention of the seller, they may still go with the highest offer, even if it includes a mortgage contingency.

Missing Out on the Mortgage Tax Deduction

If you itemize on your federal taxes, you won’t be able to deduct your mortgage interest if you pay cash for your home. Depending on what you’d pay in interest each year and what your tax bracket is, this could be a significant consideration.

The deduction can also be taken on loan interest for second homes, as long as it stays within the limits.

How to Buy a House With Cash

If you like the idea of being an all-cash buyer and you’re wondering what that process involves, here are some next steps to consider.

Consolidate Your Cash

Getting your cash together in one place could take a while, so give yourself some time. If you’re ready to buy, you may want to move your money from savings accounts, and any investments and other assets you’ve liquidated, to one easy-to-access account.

If you already own a home and plan to sell it, you’ll have to factor that into this process, as well, especially if you need the cash from the sale of your current home to put toward the purchase of your new home.

Negotiate the Price and Sign the Contract

Once you know how much cash you have to work with, you can make an offer on a home. Be prepared to provide proof that you have enough money to make the purchase. If the offer is accepted, you’ll sign a contract.

Consider the Worth of an Inspection

If you’re paying cash, a home inspection won’t be required. However, it’s a good way to protect yourself in case there are hidden issues. The same goes for getting an appraisal, owner’s title insurance, a termite inspection, and homeowners insurance.

Prepare for the Closing

The closing is when you’ll seal the deal and pay the seller. You may be asked to provide a cashier’s check for the amount you owe, or you might be able to pay with an electronic transfer.

How to Obtain a Mortgage

If you’ve decided that buying a house — or a second home — with cash isn’t doable or practical, then you’ll need to know how much you can afford to borrow.

Getting prequalified and preapproved are basics in securing a mortgage. The first provides a ballpark estimate of how much you may be able to borrow and at what rates, and the other will tell you exactly how much you can probably borrow and at what terms.

When getting preapproved, lenders will review things like your credit scores, employment history, earnings, assets, and debt to make sure you can meet your mortgage payment obligations.

You’ll need to consider if your savings are enough for your down payment, closing costs, moving costs, and home repairs. Even if a 20% down payment is ideal, that’s not always realistic or required.

Recommended: What is the Average Down Payment on a Home?
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💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan. ”

Delayed Financing: An Option for Cash Buyers

Delayed financing is a way to combine the benefits of cash and mortgage home buying. In short, it’s a way for you to buy a house with cash but then refinance the property within the first six months to get some of your cash investment back.

This route gives you the advantages of being a cash buyer but the ability to regain some of your sacrificed liquidity.

The cash-out amount can vary by loan program and there are specific eligibility requirements. For example, lenders generally require that the purchase was an arm’s-length transaction. This means the buyer and seller do not have any relationship outside of this transaction.

The stipulation is included to help ensure that each party is acting without pressure from the other and that both have access to the same information about the deal.

You may also need to show the lender a copy of your settlement statement showing the home was purchased with cash, a title report showing that you are the owner and that there are no liens on the property, and proof that your own money was used to make the purchase (no borrowed, gifted, or business funds).

The Takeaway

Paying cash for a house can be a good way to get attention in a hot seller’s market. And the idea of avoiding a monthly mortgage payment — and interest — can be appealing. But there are potential downsides to an all-cash deal.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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For many homebuyers, safety is a top concern when shopping for a house. It can influence where you feel comfortable living, and safety ratings can have a big effect on local housing market trends.

If you’re in the market to buy or rent a home and you’re looking for just the right spot, check out this list of the 50 safest cities from NeighborhoodScout.

How Is the Safest Cities List Determined?

To compile its list of the safest cities, NeighborhoodScout looks at FBI statistics for property and violent crime in cities across the country that have a population of 25,000 or more. This year’s list included areas with a township form of government, which resulted in a larger pool of locations and many newcomers to the list. (See the full list of 100 safest cities on the NeighborhoodScout site.)

💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you through the process.

What Are the Safest Cities in the U.S.?

The safest cities in America tend to be suburban areas close to major cities like Boston. Only one spot on this list, Rexburg, Idaho, is outside a major metropolitan area.

Massachusetts is home to the most cities on the list at 18. Texas, with six cities on the list, ranks in second place.

Recommended: Price-to-Rent Ratio in 50 Cities

The 50 Safest U.S. Cities in 2023

Here’s a countdown of the 50 safest cities in the U.S. that you could call home. Consider safety, along with local housing market trends, if you’re thinking about relocating.

Friendswood, Texas

Friendswood began as a Quaker town in 1895 and became known for growing and preserving Magnolia figs. Since the 1950s, it has transformed into a quiet bedroom community 30 minutes from Houston and Galveston.

Population: 41,004

Total Crime Rate (per 1,000 residents): 6.5

Chance of Being a Victim: 1 in 152

Major City Nearby: Houston

49. Newton, Massachusetts

A strong school system and proximity to downtown Boston draw homebuyers to this suburban community which is actually a cluster of 13 villages.

Population: 87,453

Total Crime Rate (per 1,000 residents): 6.5

Chance of Being a Victim: 1 in 152

Major City Nearby: Boston

48. Prosper, Texas

This growing town in the Dallas area is known for great schools and beautiful scenery. Texas has no state income tax, which may be a draw for many homebuyers, although it does have a sales tax and property taxes may be higher than in some other areas.

Population: 34,136

Total Crime Rate (per 1,000 residents): 6.4

Chance of Being a Victim: 1 in 155

Major City Nearby: Dallas

47. Dracut, Massachusetts

Dracut was home to Pennacook Indian settlements before Europeans arrived in the 1650s, and the town’s early economy depended on manufacturing and milling. The town provides easy access to the Lowell and Boston metropolitan areas.

Population: 32,159

Total Crime Rate (per 1,000 residents): 6.4

Chance of Being a Victim: 1 in 155

Major City Nearby: Boston

46. Shrewsbury, Massachusetts

Shrewsbury was incorporated in 1727 and rests just outside the Boston metropolitan area near the city of Worcester. Although the violent crime rate has risen in recent years (while the property crime rate has declined), it is still one of the safest places to live.

Population: 38,999

Total Crime Rate (per 1,000 residents): 6.4

Chance of Being a Victim: 1 in 156

Major City Nearby: Boston

45. Keller, Texas

Settled in the 1850s and named for a railroad foreman, Keller today blends urban amenities with a small-town emphasis on quality of life for its residents. The lovely Big Bear Creek Trail cuts through the city, ensuring access to a natural setting.

Population: 45,397

Total Crime Rate (per 1,000 residents): 6.3

Chance of Being a Victim: 1 in 158

Major City Nearby: Dallas

44. Rochester Hills, Michigan

This Detroit suburb features the 102-acre Avon Nature Study Area on the Clinton River and the Rochester Hills Museum, where visitors can learn about pioneer farmers, Native American history, and local ecology.

Population: 76,028

Total Crime Rate (per 1,000 residents): 6.2

Chance of Being a Victim: 1 in 160

Major City Nearby: Detroit

43. Beverly, Massachusetts

Beverly is a suburb of Boston on the North Shore of Massachusetts, just north of Salem. Like its witchy neighbor, Beverly offers historic New England architecture and water access.

Population: 42,446

Total Crime Rate (per 1,000 residents): 6.2

Chance of Being a Victim: 1 in 161

Major City Nearby: Boston

42. North Kingstown, Rhode Island

Sailboats bob on the water in this pretty Narragansett Bay town. A cluster of villages, the town was settled in the 17th century and boasts some buildings from that era, as well as the Silas Casey Farmstead, which is maintained as a classic New England farmstead.

Population: 27,911

Total Crime Rate (per 1,000 residents): 6.1

Chance of Being a Victim: 1 in 162

Major City Nearby: Providence

41. Ballwin, Missouri

This West St. Louis town, home to high-quality public schools, is located within 30 minutes of five universities and colleges. It has a diverse array of housing options at many price points.

Population: 30,870

Total Crime Rate (per 1,000 residents): 6.1

Chance of Being a Victim: 1 in 162

Major City Nearby: St. Louis

40. Melrose, Massachusetts

Another suburb of Boston, Melrose was first known as Ponde Fielde due to its many ponds and streams. The charming Downtown Melrose, known for its Victorian architecture, is on the National Register of Historic Places.

Population: 29,312

Total Crime Rate (per 1,000 residents): 6.0

Chance of Being a Victim: 1 in 164

Major City Nearby: Boston

💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

39. Milton, Georgia

Milton has one of Georgia’s highest rates of educational attainment and lowest rates of unemployment. The majority of its 39 square miles are zoned for agriculture, so residential lots are large here, at least one acre.

Population: 41,259

Total Crime Rate (per 1,000 residents): 5.9

Chance of Being a Victim: 1 in 167

Major City Nearby: Atlanta

38. Commerce Township, Michigan

Commerce Township boasts easy access to lots of lakes, although not all are accessible to the public. If waterfront living is a goal, there are many options here, from smaller, older cottages to spacious new homes.

Population: 38,718

Total Crime Rate (per 1,000 residents): 5.9

Chance of Being a Victim: 1 in 169

Major City Nearby: Detroit

37. Wylie, Texas

Once known as the “Onion Capital of the World,” Wylie is a fast-growing community with strong schools and abundant recreation opportunities for families.

Population: 59,394

Total Crime Rate (per 1,000 residents): 5.9

Chance of Being a Victim: 1 in 169

Major City Nearby: Dallas

36. Waltham, Massachusetts

Nicknamed “the watch city” because it was home to an early watch factory, this diverse Boston suburb dates from the 17th century. Today, it is home to both Bentley University and Brandeis University.

Population: 64,015

Total Crime Rate (per 1,000 residents): 5.8

Chance of Being a Victim: 1 in 169

Major City Nearby: Boston

35. Merrimack, New Hampshire

Options abound in Merrimack. Within an hour, you can get to busy Boston, hike in the beautiful Kearsarge Mountain State Forest, or take a dip at Hampton Beach State Park on the Atlantic coast.

Population: 27,132

Total Crime Rate (per 1,000 residents): 5.7

Chance of Being a Victim: 1 in 172

Major City Nearby: Manchester

34. Little Elm, Texas

A suburban vibe and easy access to parks and lakes, including an entertainment district on the shores of Lake Lewisville, would make this an appealing place to live even if crime rates weren’t so exceptionally low.

Population: 51,042

Total Crime Rate (per 1,000 residents): 5.6

Chance of Being a Victim: 1 in 176

Major City Nearby: Dallas

33. Edwardsville, Illinois

Edwardsville may be in Illinois, but it is a suburb of St. Louis and benefited from proximity to Route 66 as it grew. Among the oldest cities in Illinois, it has produced five of the state’s governors.

Population: 25,218

Total Crime Rate (per 1,000 residents): 5.5

Chance of Being a Victim: 1 in 178

Major City Nearby: St. Louis

32. Andover, Massachusetts

Andover, about 23 miles north of Boston, was incorporated in 1646 and later became a thriving mill town. The city is home to prestigious college prep school Phillips Academy.

Population: 36,517

Total Crime Rate (per 1,000 residents): 5.4

Chance of Being a Victim: 1 in 182

Major City Nearby: Boston

31. Cumberland, Rhode Island

Cumberland boasts a lovely bike trail which will eventually be part of a continuous 31.9-mile route. Its unique public library is built on the site of a former monastery, with tranquil walking paths and, in the summer, a free “Music at the Monastery” concert series.

Population: 36,434

Total Crime Rate (per 1,000 residents): 5.4

Chance of Being a Victim: 1 in 184

Major City Nearby: Providence

30. Brandon, Mississippi

This city may be 193 years old, but it is one of the fastest-growing cities in Mississippi.

Population: 25,373

Total Crime Rate (per 1,000 residents): 5.3

Chance of Being a Victim: 1 in 186

Major City Nearby: Jackson

29. Mundelein, Illinois

Less than an hour west of Chicago, Mundelein offers well-priced housing and a strong school system. Top employers are industrial and manufacturing companies, but the village also offers easy access to the Windy City.

Population: 31,560

Total Crime Rate (per 1,000 residents): 5.3

Chance of Being a Victim: 1 in 187

Major City Nearby: Chicago

28. Wellesley, Massachusetts

West of Newton, Wellesley is a much smaller municipality, though the median household income is higher, at over $226,000, and the homeownership rate tops 80%.

Population: 30,191

Total Crime Rate (per 1,000 residents): 5.2

Chance of Being a Victim: 1 in 189

Major City Nearby: Boston

Recommended: Cost of Living by State

27. North Andover, Massachusetts

Massachusetts makes a good showing on the safest cities list, representing nearly 30% of the burgs listed.

Population: 30,711

Total Crime Rate (per 1,000 residents): 5.2

Chance of Being a Victim: 1 in 190

Major City Nearby: Boston

26. Reading, Massachusetts

Another Boston suburb just north of the city, Reading is a town of about 9,200 households with a median household income just over $145,000.

Population: 25,223

Total Crime Rate (per 1,000 residents): 5.1

Chance of Being a Victim: 1 in 192

Major City Nearby: Boston

25. Mason, Ohio

Mason is the largest city in Warren County. The county is known as “Ohio’s Largest Playground” and boasts regional attractions including the Golf Center, the Great Wolf Lodge, and Kings Island amusement park.

Population: 35,089

Total Crime Rate (per 1,000 residents): 5.1

Chance of Being a Victim: 1 in 192

Major City Nearby: Cincinnati

24. Billerica, Massachusetts

Billerica sits on the Shawsheen and Concord rivers about 20 miles northwest of Boston and is home to about 15,000 households.

Population: 41,453

Total Crime Rate (per 1,000 residents): 5.1

Chance of Being a Victim: 1 in 195

Major City Nearby: Boston

23. Johns Creek, Georgia

The City of Johns Creek is a fairly young one, having been designated in 2006. But it is home to 200 companies and a thriving population.

Population: 82,065

Total Crime Rate (per 1,000 residents): 4.9

Chance of Being a Victim: 1 in 202

Major City Nearby: Atlanta

22. West Bloomfield, Michigan

This township less than 30 miles from Detroit has many small- and medium-sized lakes. West Bloomfield has a large Jewish population and is home to the Jewish Community Center of Metropolitan Detroit.

Population: 65,560

Total Crime Rate (per 1,000 residents): 4.9

Chance of Being a Victim: 1 in 204

Major City Nearby: Detroit

21. Colleyville, Texas

Conveniently sandwiched between the Dallas and Fort Worth areas, Colleyville offers a rural feel close to big-city amenities.

Population: 27,091

Total Crime Rate (per 1,000 residents): 6.4

Chance of Being a Victim: 1 in 154

Major City Nearby: Dallas

20. South Kingstown, Rhode Island

South Kingstown is home to two scenic beaches, as well as picturesque farmlands and a riverfront walkway.

Population: 31,851

Total Crime Rate (per 1,000 residents): 4.7

Chance of Being a Victim: 1 in 212

Major City Nearby: Providence

19. Windsor, Colorado

The only Colorado city on the list, Windsor, near the front range of the Rocky Mountains, once boasted giant herds of bison and a bustling sugar beet industry. Today, it is a hotbed of green industry, including windmill blade production and ethanol production.

Population: 35,788

Total Crime Rate (per 1,000 residents): 4.5

Chance of Being a Victim: 1 in 218

Major City Nearby: Greeley

18. Wakefield, Massachusetts

Residents of Wakefield enjoy easy commuter-rail service to Boston and recreational activities on and around scenic Lake Quannapowitt.

Population: 27,104

Total Crime Rate (per 1,000 residents): 4.5

Chance of Being a Victim: 1 in 218

Major City Nearby: Boston

17. Madison, Mississippi

This suburb of Jackson has a rural feel and a small-town atmosphere. It is a popular choice for retirees.

Population: 27,719

Total Crime Rate (per 1,000 residents): 4.5

Chance of Being a Victim: 1 in 221

Major City Nearby: Jackson

16. Avon Lake, Ohio

This suburb of Cleveland lies on the shore of Lake Erie. Ample parks, a bike trail, and an aquatic center ensure residents of all ages have plenty of options for fitness.

Population: 25,588

Total Crime Rate (per 1,000 residents): 4.3

Chance of Being a Victim: 1 in 232

Major City Nearby: Cleveland

15. White Lake, Michigan

Of the four Michigan cities on this list, White Lake ranks the safest.

Population: 30,990

Total Crime Rate (per 1,000 residents): 4.2

Chance of Being a Victim: 1 in 233

Major City Nearby: Detroit

14. Needham, Massachusetts

Like many of the Massachusetts cities on this list, Needham is a well-off bedroom community of Boston, with a median household income of about $174,000.

Population: 32,048

Total Crime Rate (per 1,000 residents): 4.2

Chance of Being a Victim: 1 in 233

Major City Nearby: Boston

13. Milton, Massachusetts

In Milton, an attractive suburb 10 miles south of Boston, is the birthplace of former U.S. President George H.W. Bush.

Population: 27,593

Total Crime Rate (per 1,000 residents): 2.7

Chance of Being a Victim: 1 in 367

Major City Nearby: Boston

12. Oswego, Illinois

Located about 50 miles west of Chicago on the Fox River, Oswego lies on two rail lines and near three state highways and two U.S. highways. It has experienced rapid growth in recent years.

Population: 35,316

Total Crime Rate (per 1,000 residents): 4.1

Chance of Being a Victim: 1 in 238

Major City Nearby: Chicago

11. Independence, Kentucky

The only Kentucky town to make it to the list, Independence is a short drive across the Ohio River to Cincinnati.

Population: 28,920

Total Crime Rate (per 1,000 residents): 3.9

Chance of Being a Victim: 1 in 253

Major City Nearby: Cincinnati

10. Rexburg, Idaho

Rexburg, in eastern Idaho, is one of the only cities on this list that’s not near a major metropolitan area. Its proximity to nature is one of its calling cards. Yellowstone National Park is just 80 miles away.

Population: 35,300

Total Crime Rate (per 1,000 residents): 3.9

Chance of Being a Victim: 1 in 253

Major City Nearby: N/A

9. Muskego, Wisconsin

This cozy city sits within the orbit of Milwaukee and within the greater Chicago area.

Population: 25,242

Total Crime Rate (per 1,000 residents):3.8

Chance of Being a Victim: 1 in 265

Major City Nearby: Milwaukee

8. Lexington, Massachusetts

Known as the town where the first shots of the Revolutionary War were fired, Lexington is a suburb of Boston where the median household income tops $200,000.

Population: 34,071

Total Crime Rate (per 1,000 residents):3.7

Chance of Being a Victim: 1 in 270

Major City Nearby: Boston

7. Zionsville, Indiana

Excellent schools and stable home values attract residents looking for a small-town feel just 20 minutes outside Indianapolis.

Population: 31,702

Total Crime Rate (per 1,000 residents):3.6

Chance of Being a Victim: 1 in 275

Major City Nearby: Indianapolis

6. Fulshear, Texas

Fulshear has grown significantly in size in the 21st century, though it has retained its small-town charm.

Population: 25,169

Total Crime Rate (per 1,000 residents): 3.6

Chance of Being a Victim: 1 in 276

Major City Nearby: Houston

5. Arlington, Massachusetts

Settled in 1635 as the town of Menotomy, Arlington was renamed in 1867 in honor of those buried at Arlington National Cemetery. The city is just 6 miles from Boston.

Population: 45,617

Total Crime Rate (per 1,000 residents): 3.4

Chance of Being a Victim: 1 in 292

Major City Nearby: Boston

4. Marshfield, Massachusetts

Marshfield is 30 miles from Boston on the South Shore where Cape Cod meets the Massachusetts Bay. The year-round population grows to 40,000 in the summer months.

Population: 25,869

Total Crime Rate (per 1,000 residents): 3.3

Chance of Being a Victim: 1 in 300

Major City Nearby: Boston

3. Lake in the Hills, Illinois

Once a sleepy rural community home to seasonal residents who enjoyed the area’s lakes, Lake in the Hills became a quickly growing suburb of Chicago in the last few decades.

Population: 28,945

Total Crime Rate (per 1,000 residents): 3.1

Chance of Being a Victim: 1 in 321

Major City Nearby: Chicago

2. Franklin, Massachusetts

Franklin is conveniently located between Boston and Providence, Rhode Island. The town is named in honor of Benjamin Franklin, whose donated books formed the first public library in the country.

Population: 33,036

Total Crime Rate (per 1,000 residents): 2.9

Chance of Being a Victim: 1 in 344

Major City Nearby: Boston

1. Ridgefield, Connecticut

This pretty colonial town nestled in the foothills of the Berkshire Mountains was founded over 300 years ago and today ranks as America’s safest city. Visitors come for its historic Main Street. Families stay for its strong schools and, of course, its excellent safety rating.

Population: 25,011

Total Crime Rate (per 1,000 residents): 1.9

Chance of Being a Victim: 1 in 510

Major City Nearby: Bridgeport

The Takeaway

It’s a safe bet that house hunters will find many of these 50 safest cities in the U.S. appealing. There’s a lot to like about these towns in addition to their low crime rates, including great schools, high-quality housing stock, and natural wonders.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Are you thinking about hunting for a home or already hitting the open houses? If so, creating a home-buying wish list can help you identify what you need, what you want, what to avoid, and other key factors in your decision of whether to bid on a property or not.

By getting these thoughts down on paper (or an online document), you can better focus your house hunting and have a guide as you navigate this process.

Here, you’ll learn more about creating a home-buying wish list template and zooming in on the right property for you. It will also help you steer clear of falling for a house that can wind up being a bad fit as time passes.

What Is a Home-Buying Wish List?

A home-buying wish list is a simple template that can help you identify and prioritize the features you are looking for in a home. It gives you a method to evaluate whether a property is one to bid on or one to pass on.

For example, a wish list can help you zero in on the price you want to pay, the community you want to be in, the style and size of the home, the acreage of the property and outdoor features, and other variables.

By having a wish list, you can stay on target. Say you fell in love with a charming farmhouse with shutters and perfect window boxes full of flowers, but no ground-floor bathroom (or room to add one) and a roof in need of repair. If your wish list said, “Must have a ground-floor bathroom” and “Roof in good repair,” you would hopefully be able to say no to the home’s curb appeal and keep searching. That way, you may well avoid having buyer’s regret.

Benefits of a Home-Buying Wish List

A home-buying wish list has several pros:

•  Creating a wish list gives you the opportunity to consider your needs and wants in a home. It also will help you prioritize the features that you most want in a property.

•  A wish list can help you stay on budget. If you know that you absolutely must have a spa-style bathroom or a chef’s kitchen, you need to stay focused on finding a home that offers that or else have money set aside to renovate to those specifications.

•  By developing a wish list, you and your partner or family member you are house shopping with can align on priorities.

•  You can better understand trade-offs involved in a home purchase. For instance, if you are determined to buy in an area with a hot housing market or a pricey school district, you may only be able to afford a smaller property than you might like.

Recommended: First-Time Home-Buyer Programs

How to Create a Home-Buying Wish List

If you are ready to dive in, follow these steps to develop your wish list.

First, Daydream a Little

After you’ve closed your eyes and thought about it, write down everything you saw in the vision.

Before writing down all your wants on a home-buying wish list, sit back and fantasize a little about what an ideal home looks like. This dream house will look different to everyone, but after you’ve closed your eyes and thought about it for a while, you should write down everything you saw in the vision.

Is there a big yard and open space (or even a pool), or is it in the center of town where all the action is? Do you gravitate toward a mid-century modern home or a center-hall colonial? Does the dream home come with a big eat-in kitchen, or are lots of bedrooms more important? Is there space for a game room? An outdoor spa? A wraparound deck or a balcony overlooking it all?

It’s your dream. Go ahead and dream about home size, home age, and home style. That way, you can better realize what you really want (and want to steer clear of) in a home. Start writing down your wish list.


💡 Quick Tip: With SoFi, it takes just minutes to view your rate for a home loan online.

Whittle Down the Dream List

After spending some time thinking about what a dream home would look like if money were no object and jotting down notes, you might then start crossing things off your list.

Realistically, maybe you don’t need five bedrooms but can live with three instead, and maybe the basement doesn’t need to be finished just yet. Or, perhaps a kitchen remodel can come with lower-end appliances that look like commercial ones but come with a more manageable price tag.

Bring down that daydream list to reality before beginning the search.

Consider Who You’re Buying With, Too

Before going out to buy a home, whether you’re a first-time home buyer or old hand, it’s important to think about who’s going to live there. Is it just for one? A couple? A whole family?

It would be best to get everyone’s input on wants vs. needs to ensure that all will be satisfied with this monumental life and financial decision. You might want to sit down as a group and consider the following.

•  Setting: It may also be a good idea to get granular about your location. For instance, a potential homebuyer who has a dog may want to consider a neighborhood that has good walkability and sidewalks.

A potential buyer who works from home may want to think about how close a coffee shop is so they can pop over for a snack. Websites like Walk Score can help people discover how close cafes, shops, restaurants, grocery stores, and public transportation are to their new address.

•  The right school district: If a person is buying a new home with family members in mind, it’s important to consider every home’s school district. Websites like GreatSchools provide information on school district rankings. All users need to do is pop in the ZIP code.

Even if a person isn’t thinking about having children, school districts still may play a role in their home-buying decision. That’s because a school district can play a major part in a home’s resale value.

It may be a good idea to also draw up a neighborhood wish list.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show proof of prequalification to the real estate agent. With SoFi’s online application, it can take just minutes to get prequalified.

Home-Buying Wish List Template

Need some inspo for creating a home-buying wish list? Check out the U.S. Department of Housing and Urban Development’s checklist .

You can then customize it and drill down on the features that really matter to you. For instance, if you have school-age kids, you might add a line for after-school care programs; are they offered or not?

If you know you will be tight on cash for renovations, then you might get more specific about the age of key home systems, such as the HVAC, the major appliances, the roof, and so forth.

Questions to Ask While Home Shopping

In addition to running through the usual features of a home, here are a few additional points to consider:

•  Are you in an area that is prone to natural disasters? Would you, say, need flood insurance, and how much would it cost?

•  Have any additions been made to the home? If so, was the paperwork (permits and such) properly filed?

•  What are the typical monthly utility costs for the home? This may help you get a ballpark number that can help you assess your home-buying budget.

•  Is there an HOA? If so, what costs are involved, and what rules are enforced?

Recommended: What Do I Need to Buy a House?

The Takeaway

Creating a homebuying wish list helps to identify wants and needs, what is in the budget, and what everyone involved—spouse, children, pets, guests, an elder parent—can live with happily (if not ever after, for a while). Home style, size, neighborhood, and amenities come into play.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How do I make a house wish list?

A good place to start is with the U.S. Department of Housing and Urban Development’s checklist. You can then customize the wishlist to better suit your areas of focus, such as school districts and programs, or, say, acreage and outdoor features.

How do I get my house ready to sell with a checklist?

Many home-buying sites and mortgage lenders offer downloadable checklists that help you get your house in order to sell. These typically review how to assess and enhance the exterior of your home, your property, as well as the interior. Usually, they go room by room with features for you to note and maintenance issues to potentially wrangle.

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you’re wondering whether it’s cheaper to buy or build a home, the numbers say that purchasing a house is typically cheaper, by more than six figures. That, of course, may vary with location and the kind of house you want to live in. But still, if price is your key determining factor, you’ll likely want to hit the real estate websites and open houses.

However, if you crave the process of creating a home from scratch and want total personalization, you might prefer to build. Or it might actually wind up being a better financial move than buying an existing house in your area.

Here, take a close look at this topic so you can decide which option suits you best.

Is It Cheaper to Build a House or Buy a House?

If you let the numbers tell the story, it is cheaper to buy a house than build one yourself.

In 2022, the average cost to build a house from the ground up was $644,750. The typical cost to buy a home was approximately $503,000. That’s a considerable difference.

However, prices can of course vary. If you are building a simple new home (perhaps it’s one-level living) in an area with a low cost of living, it might be quite affordable vs. buying. Much will depend on the particulars of your situation.

Cost of Buying a House

As mentioned, sales figures suggest that it is often cheaper to buy an already built house than to build a brand-new one. But, when it comes to buying an existing home, the price paid to the seller may only reflect a portion of the actual cost of home ownership.

Even if an individual can afford the home listing price, there are often additional expenses — like closing costs and any renovation or repair fees. Here’s a closer look.

Identifying Existing Wear and Tear

For pre-built homes, age is one factor. The older a house, the more likely it is to need some upkeep and extra care.

Before buying an existing house, a home inspection conducted by a certified professional can help future homeowners to stay informed about the current state of the house. You’ll want to be prepared for any major repairs or structural improvements that are needed.

Typically, the buyer is responsible for paying for a home inspection, which can add several hundred dollars to the purchasing costs. However, that can be an important look at the home’s condition and can let you know about and negotiate upcoming expenses. For instance, if the hot-water heater is nearing the end of its lifespan, the house needs rewiring, or the foundation definitely needs work, you could then try to get the seller to address some of all of the associated costs.

Evaluating Home Improvement Costs

When you buy a home, you will likely want to make some changes. Perhaps you want to install a heat pump, swap out the kitchen appliances, add a half-bathroom, strip off wallpaper, or simply buy new furniture to make the place yours.

These kinds of changes will add to the listed purchase price. For that reason, it’s often worth evaluating the cost of future alterations when estimating the cost of buying a house — whether such changes are large or small.

Ongoing Repairs, Maintenance, and Warranties

Even if repairs are not required right away, it can be useful to review the age of an existing home, along with that of its parts. When you build a home, everything is likely to be brand new. When you buy a home, you could have systems and appliances that are decades old and in rough shape.

Although buyers may not want to replace the roof at the time of purchase, mulling over the average lifespan of major home features (like roofing) can be beneficial. Some questions:

•   When were the house features last updated?

•   How well have these features been maintained? (The term “deferred maintenance” may signal you have some work to do.)

•   What will need repairs first in the near future?

Here’s one extra maintenance detail to think over: Older homes may not be as energy-efficient as newly built houses, meaning that — without upgrades to existing systems — it could cost a buyer more each month to heat and cool the house. Such ongoing and future expenditures may, over time, offset any savings received early on from buying instead of building a new home.

Cost of Constructing a New House

So, compared to buying an existing house, how can a buyer evaluate how much the cost of building a new home might be? The average single-family home costs about $150 per square foot to build. However, that figure is just a mathematical average. The individual cost can still vary greatly, depending on a home’s location, the builders chosen, property lot size, materials used, and other variables.

Calculating Construction Costs

The NAHB (National Association of Home Builders) estimates that construction costs amount to almost 61% of the average single-family new home build (finished lot costs comprise about 17.8% of sale prices). Included in these construction costs are things like:

•   Building permit fees

•   Land preparation

•   Excavation and foundation work

•   Frame construction and sheathing

•   Roofing pricing

•   Plumbing, electricity, and HVAC

•   Windows and doors

•   Appliances

•   Flooring

•   Clean-up

Put another way, if a new house costs $300,000 total, $183,300 of that would go toward construction, including materials and labor.

Recommended: The Cost of Living in California

Interior Finishes

On top of those costs, individuals interested in building a new home may also want to ponder the cost of interior finishes. According to the NAHB, interior finishes (such as walls, stairs, and doors) amount to about 24% of new home building costs.

While the actual amount will depend largely on a home buyer’s specific choices, based on this average, $76,200 of a $300,000 home would go toward interior costs, such as painting, trim, doors, plumbing fixtures, appliances, and lighting.

Pros and Cons of Building a House

While on paper it might appear cheaper to buy a house than to build a new one, it can be helpful to look deeper than just the listing price. Here, some of the pros to building your own home:

•   A brand-new house could require less maintenance and upkeep for years into the future. In many newly built homes, items such as appliances, roofing, and HVAC may be covered initially by manufacturer and construction warranties. In that case, were something to break (if under warranty), the out-of-pocket expense could be covered (and not up to the buyer to pay for).

•   A customized home may appeal on another level as well. Having a home that is designed exactly as you like can be incredibly satisfying. It can reflect your personal taste and address every need.

On the con side, consider these points:

•   When it comes to how long it will take to build a home, it’s likely a lot longer than buying one. It takes an average of 7.6 months to complete a new home, according to U.S. Census Bureau data. Not all buyers may want to wait around that long to move in.

•   As previously mentioned, building a home can be more expensive than buying one that is already built.

•   You will need to wrangle permits (or have someone do it for you) when going through the steps of building your own home.

•   With a built-from-scratch home, buyers could also run a higher risk of ballooning construction costs or extended delays, which might result in extra interim costs too. While construction on the new home is being finished up, for instance, a buyer may need to pay for another place to stay.

•   Also, there’s stress involved when delays and extra expenses crop up. You need to have time available to interact with your building team, too, which can be an issue for some people.

Pros and Cons of Buying a House

Next, let’s consider the benefits and drawbacks of buying a house. On the plus side:

•   Typically, as described above, buying a house costs less than building one.

•   If you buy a house vs. build one, you will likely be able to move in more quickly. In fact, you might even be able to move in right away, without any renovations.

•   When you buy a house, what you see is what you get. There won’t be any surprises as construction gets underway, nor any areas that don’t wind up looking the way you’d imagined they would.

Now, for the downsides of buying vs. building a house:

•   It may not be exactly the house you want, and you may not be able to remodel it to become your dream house.

•   You may have to deal with the stress of bidding wars and other nuances of house hunting, especially in a hot housing market.

•   The home you buy may have maintenance issues and may not be as energy-efficient as a new home.

Recommended: First-Time Homebuyers Guide

The Takeaway

It is typically faster and less expensive to buy an existing home vs. building one. However, whether it is cheaper to build or buy a house can come down to individual situations and variables like desired locations and home amenities or design features. For different people, the main motivating factor may vary, and the choice of buying or building will reflect a very personal preference.

If you are in the market to buy, a SoFi Mortgage Loan can offer a competitive yet flexible option. With low down payments available and terms that can suit your needs, a SoFi Mortgage Loan can get you started on the path to purchasing your very own place. Plus, the whole process is quick and easy.

Shopping for a home? Learn more about SoFi Mortgage Loans today!

FAQ

Is it cheaper to build a home or buy?

It is typically considerably cheaper to buy a home vs. building one. Recent data suggests it’s 25% pricier to build than buy.

Is building a house cheaper than buying in California?

California is an exception to the rule that it’s generally more affordable to buy than build. By building your own home in California, you could save $200,000 vs. buying.

How can I save money to build a house?

If you want to save money to build a house, you can track and reduce your spending, grow your money in a high-yield savings account, pay down high-interest debt, and also try to earn more via a side hustle.

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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