When it comes to building a dream home, most homeowners know enough to get ready to drop a decent chunk of change. Even in the best-case scenario, home building can skyrocket past estimates, particularly when costly upgrades and fixes are involved. Costly factors often tip the scales for home builders, increasing their budgets before they know it. Often times, homeowners put so many upgrades into their new or existing home that they actually overvalue their own property or the properties around it. Those looking to build their dream home would be wise to look at all of these factors before breaking ground, in order to save themselves valuable time and money.
Unexpected Costs of Home Building
Home building can cost an arm and a leg to start off, but it also comes with unexpected costs that many homeowners don’t foresee. Make sure your tastes match up to your builders allowances. You can quickly go over budget if these allowances are low to begin with and overlooked. For example, maybe your appliance allowance is $2,000 for your refridgerator, stove, dishwasher, microwave, yet the side by side refrigerator you want is $2,300? You can quickly start to fall behind on your numbers. These factors often cause the homeowner to keep reaching into their pocket for these extras. The average homeowner adds 10% of the original price by the time they move in. According to Business Insider, unexpected home build costs can involve appliances, countertop and flooring upgrades, and even limitations depending on the originally purchased lot. Add in and plan for delays as well as interior re-decorating, and the price of a dream home has suddenly increased substantially.
Beware of Over-Improving
It can be difficult, when building a dream home, to stay away from overdoing it when it comes to improvements. Many homeowners want to simply build the nicest, biggest, most beautiful home they can afford. However, Bankrate warns housebuilders to watch out for over-improving. For example, a $600,000 home in a $300,000 neighborhood won’t hold its value for resale because it is over-improved for its location. Cost does not always equal value, so homeowners should be careful when shelling out the big bucks on costly upgrades.
Valuable Cost-Saving Tips
Dream homes are not always money pits, despite common belief. With the right cost-saving moves, home builders can confidently avoid unexpected costs and build a home to hold value for years to come. ThoughtCo. tells us that by choosing the right materials, shape, and use of space, homeowners can cut costs while still creating their dream home. The cost of small finishes such as doorknobs and faucets can add up quickly, so be aware of these items when building; they can always be upgraded later. Any energy-efficient upgrades will continue to pay off for years to come, so consider saving energy in initial planning.
Dream homes don’t have to be wishful thinking anymore. With the right preparedness and cost-awareness, homeowners can make the right decisions to construct the home they’ve always dreamed of.
Mortgaging and financing.
Getting the sales price correct or as close to possible will help you finance the upgrades/allowances. If are putting less than 20% down and want to utilize your down payment the smartest way. The more the appraiser knows about your plans and improvements the better luck you will have to include these extras in your loan amount. You will need a "construction loan" if the builder is not covering the costs throughout construction. These can be more expensive in terms of closing costs and more complicated with paperwork. Keep in mind that if the builder is carrying and covering the costs it is in his best interest to keep the project on time :)