Building a new home can be a hugely exciting prospect. However, starting the process without budgeting correctly can quickly become a costly mistake.
We’ve seen many families get caught up in the excitement and build a house that’s too expensive for their budget. We’ve put together a step-by-step guide to help you avoid these mistakes.
Decide What You Can Afford
If you want to save money on interior finishes like cabinetry and countertops, opt for stock options rather than custom details. This can be easily changed, while high-end finishes (like crown molding and stainless steel appliances) may cost more to replace later.
Research the average costs of building your desired home type in your area to understand what to expect. You can also ask builders in your area about their prices and see if they offer discounts for repeat customers; you can check this website for more details.
Consider all the expenses associated with building a new house, including materials and utilities. Be realistic and work with your agent to create a budget to allow you to enjoy your dream home without debt.
Create a Floor Plan
Creating a floor plan can help communicate design ideas. It also helps to save resources as building gets underway and may prevent budget-impacting surprises later in the project.
A thorough floor plan includes:
- The outside walls or footprint of each room.
- The dimensions of doors from wall to doorframe and the other side.
- Windows from ceiling to bottom and from both ends.
- The placement and sizes of permanent fixtures like electrical outlets.
It should also include measurements of the heights of stairs, where they run, and how many are needed.
Consider your lifestyle when designing your home’s floor plan. For example, if you’re a musician, having an area to practice your instruments would be beneficial. Also, consider the market demands for the type of house you want to build and what other homes are selling for in your area.
Create a Budget Sheet
When it comes to construction projects, no one ever gets their final project exactly on budget. However, by taking a few key steps to estimate costs before the project starts, you can help reduce the risk of overspending.
Start by pricing out the materials and services you’ll need. This will show you how much your house could cost, even without a concrete foundation or plumbing installed.
Other important items to consider include the cost of the lot, utility fees (gas, water, and sewer), demolition, and site preparation. Additionally, building an energy-efficient home may require additional upfront investments but will save you money in the long run. You can find a free spreadsheet to use for budgeting here.
Get Pre-Approved for a Mortgage
Building a new home can be a daunting task. Whether starting from scratch or adding to an existing structure, it is important to budget your project carefully. This will help prevent you from getting stuck with a large mortgage payment or paying extra for unexpected expenses during the build.
You will want to start by shopping for builders and determining their costs. It would help if you also got a pre-approval for your mortgage. This will let you know how much you can spend on the entire design and construction process. This will prevent you from spending more than you can afford and allow you to save the money left over for other upgrades or improvements later on.
Find Your Lot
Once you’ve secured financing, scouted and purchased a plot of land, and consulted with a contractor on floorplan options, it’s time to start building! Changing designs, materials, or floorplans is much more difficult, costly, and time-consuming once construction is underway.
Consider zoning and neighborhood covenants or restrictions that may impact your house plans when looking for your lot. Check with local utilities to find out how much it will cost to hook up the lot’s water, sewer, and electricity.
Tracking expenses in a budget journal or spreadsheet can help you keep your costs on track and flag any overruns early. This key step will prevent surprises and keep you in control of your new home build.