If you are in the market for a home, be it your first or your fifth, it may not seem possible to build something new. It can be intimidating and, if you’re not careful, the cost can inflate quickly. If you work with a good contractor, however, and keep these steps in mind, building a new home may be within your price range.
When you take out your loan, make sure you keep in your mind the very real possibility of unexpected costs during construction. Instead of just taking out as much as you can at the beginning of the project, put in a contingent fund equal to 5-7% of the loan for emergency funds. This small foresight will save you headaches down the road.
Next, you want to find a focus point for your project. If you are building as a couple, make sure you sit down together to discuss this. When envisioning your new home, what aspect is most important to you? Is it the quality, the functionality, the investment? Pick one or two focus points to guide you through the process. This will give you confidence and keep you from losing track of what’s important as you go through the process.
Make sure when you enter into a deal with a builder that you understand how much money you are putting into the project in relation to other homes. You want to get the most for your money, but you also want to temper your expectations based on your price range. If you want a higher quality home than you can afford, you may want to consider downsizing. That way, you can afford to pay more per square foot.
When deciding if you can afford to build a new home, it’s helpful to know how much a loan officer will be willing to offer you. A great tool to give you a roundabout estimate is a loan calculator, but you need to know what to include to properly use this tool. Credit card and car payments, as well as any other debts you may be paying off, are what a loan officer will be most concerned about.
Once you decide to either build or buy a home, you will want to get a pre-approved loan. This will be crucial during the price negotiation phase.
After all is said and done, if you buy a new home, chances are your equity will be higher – much higher – than if you buy used. You may save money in the short run, but building new is a very profitable investment. Read more about how to buy a home, including links to a reliable loan calculator and more, at: http://truebuilthome.com/how-to-buy-a-home/.
