Determine how much you can afford
The first step to building your new home is to determine how much you can actually afford. The amount of home you get for your dollar varies with an innumerable amount of factors, from the cost of your builder, to the type of layout, to the labor involved and the cost of materials. A house that’s built on a slope might be more problematic and expensive to build than one on level ground. On the other hand, building a square or rectangular house with few odd angles and curves will be less pricey than a complicated custom layout with twists, turns, and turrets.
If you’re going to be financing your new home, you should talk to a home loan expert and get pre-approved. Then comes the tricky part: you need to figure out how to handle all of the costs involved. You should construct your budget before you even think about any other parts of the process. This will help you keep your costs at a manageable level and understand where your money will be going.
According to BuildMax, a home consulting firm, your first budget estimate will be a way to help you consider the feasibility of your project. A budget will help you determine all of your design options, and understand what is and isn’t within your means. Here’s the process recommended by BuildMax for designing a budget.
- Identify your priorities. What is most important to you? Is it an expensive kitchen? Multiple bedrooms? A home office? Make a list of everything that you “must have” and calculate the potential cost.
- Figure out your trade-offs. Maybe you want an all-marble kitchen but realize that it has a heftier price tag than you bargained for. What would you be willing to lose instead? Is the fancy kitchen more important to you than the library you wanted? Would you be willing to scratch one or the other off of your plans?
- Complete a cost and benefit analysis. Figure out what is and what is not worth the cost. When you go to sell your home, is the pool going to be worth the cost it takes to put in? Are you going to get a significant return on investment for certain features of your home?
When you’re constructing your budget, don’t forget to factor in outdoor features that you plan on adding. It is especially important to make an allowance for landscaping, unless you’re going for that “fresh from the construction lot” dirt-and-rubble look.
Pick a builder
The key to designing your new home is communication with the builders and designers who will be involved in the project. You should involve just as much care in selecting your builder as you do in picking your floor plan and location. There is nothing more important than finding a reputable builder who will build you a quality home.
Make sure you do your homework when you’re looking for builders. According to the National Association of Home Builders, there are a few different ways you can identify potential builders:
- Contact your local home builders association for a list of builders in your area.
- Check the real estate section of your local newspaper for builders and projects. This can help you learn which builders are active in your area, as well as which ones are building homes you like that are in your target price range.
- Ask a local real estate agent, as well as friends and relatives.
If possible, you should try to talk to homeowners who have had homes built by the companies you are considering. The builder may even be able to provide references for homeowners who would be willing to talk to you about their experience.
Try to look at new homes as much as you can. The building company might host home shows and open houses. You should use these opportunities to look at the quality of the construction, including the quality of the cabinetry, the trim work, the carpeting, and the paint.
Ask plenty of questions, and don’t ever think your question is too insignificant. You should ask about warranties, completion dates, licensing, business experience, and much more. I found a great list of questions on Dear Monty, a real estate advice column, and you can see the full list here. Take your time when selecting a builder, and most of all, be thorough!
Choose a floor plan and trimmings
Choosing a floor plan can certainly be intimidating. The first thing to ask yourself is whether you would like to use a custom floor plan, or a pre-drawn one. Pre-drawn plans are much cheaper, and can typically be delivered within a few days. On the other hand, custom floor plans will typically cost you about 5-10% of the cost of the home, and take weeks or months to deliver.
You then need to settle on the main features of your dream home. Perhaps you and your partner have different ideas on what your dream home involves. Together, you need to compromise on a number of bedrooms, bathrooms, and any unique features you are interested in building. Your lifestyle and plans for the future should be the main factors for your decisions about the floor plan. If you’re a young family, and planning on having more kids, you might want to include additional bedrooms. If you’re planning on retiring in the new home, perhaps a ranch-style house will allow you to extend your use of the house into your golden years, when your mobility may be more limited.
There are several basic construction choices that can really jack up the cost of your new home. Choosing a two-story home over a ranch style home will generally cost less because you will use less material per square foot. The type of foundation can significantly impact the cost of your home; concrete slab costs the least, and basement foundations are the most expensive.
When building your new home you might also consider making it a “green” home. Energy Star homes are much better for the environment, but can cost about 4-8% more at the outset. You will, however, experience many benefits from having an energy-efficient home, including improved air quality, better comfort and temperature in your home, and most of all, reduced energy bills. Although the initial cost is higher, it will likely pay for itself over time, and may even raise your asking price when you are ready to sell your home.
If you’re building a new home, congratulations! It’s an exciting process. By doing your homework and coming to the table with a set budget, you can more easily navigate the process and make it much smoother for yourself, and the builder.
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