Purchasing a home that’s “new to you” is exciting, but most people have the ultimate dream of building their own house. Building your own house isn’t cheap, but there are ways to go about the process that won’t leave your breaking the bank.
If your true dream is to build the home of your own design for yourself and your family, take time to research the process beforehand. Here is a brief look at some financial planning tips for building a new home that will help make lower the learning curve once you get started.
Layout a budget for your home build
No matter where you want to set the budget, building your home will cost just a little more. Budgeting is important during a build.
Consider the core costs of home building, but don’t forget to include finishing costs, gas, internet, or cable hookups, and always include a contingency.
A building budget without a contingency plan will always get blown out of the water. Always over budget, so you’ll have a nice surprise if there is money left over in the end.
Explore your financing options
It’s likely that you will need to acquire a construction loan for your new home to have the funds it takes to get the job done. A construction home loan works a little different than a traditional home loan.
The bank won’t release the full amount of the construction loan all at once. You will receive structured incremental payments for the builder along the way.
Construction loans also typically have a higher down payment requirement, so make sure you save enough to secure the loan without an issue.
Never pass up a chance to cut costs
As it has been stated, building your own home isn’t cheap. It’s always a good idea to look for ways to cut costs in your new home build. You don’t have to have the most expensive materials throughout your home to build a strong, reliable, and safe structure. Cutting costs throughout the build could help you come out better off than you may have imagined in the end.
Price out a competent builder
Choosing the right builder is just as important to your new home as the architectural design. You will be working with your builder for a long time, so it’s important to make sure you choose the right professional for the job.
Keep detailed records of the process
As you move through the process of building your new home, you need to keep detailed records of everything that is done. Financial records of your home build will be crucial for various reasons during and after you’re done building.