No matter what size home you build, your building budget is important. One of the biggest fears homeowners have when starting a new home is that they will end up paying more than they bargained for.
That’s a serious concern, but there are generally two mistakes homeowners make when building a new home—especially a custom home—that cause them to go significantly over budget. Of course there are a lot of details that go into building a house, but let’s look at these two big factors and how they impact you as a homeowner.
Setting an Unrealistic Budget: Sometimes a homeowner goes into a home with a budget in mind that really doesn’t match the expectation he or she has for the house. Some people see something they want online or at a friend’s or on television and have their heart set on it. It can be really hard to pull back from a plan or a dream you love.
Instead, it’s better to figure out what you can really afford. Take a hard look at your budget. You may even want to qualify for your loan first so you’ll know what you really have to work with. Once you have your rough (but realistic) budget, you can talk to a builder and let him know what your range is. He’ll then be able to tell you what he can create for you in that range.
Having said that, it’s still a good idea to make sure your budget can handle a few changes or upgrades. You don’t want to be so tight with your budget that you can’t deal with unexpected developments (or opportunities). Here’s some helpful information on how to do that.
Unrestrained Desires: One of the biggest budget-busters out there is when a homeowner sees something really great that wasn’t in the original estimate and “has to have it.” It could be custom counter tops. It might be using reclaimed wood as an accent. It could be installing heated flooring in the bathroom. Sometimes it’s adding a room, or making a room bigger. It’s usually an upgrade of some kind that isn’t essential and isn’t part of the original budget.
The problem is that alone, some of those changes don’t seem like much, but a number of small changes can add up quickly. A good builder will insist on a change order to protect you and him, but a homeowner who really wants to make the changes will have to pay for them.
You don’t have to worry about busting your budget if you start with a realistic one to begin with (i.e. one you can afford) and honest expectations of what it will get you. You may still have to “rein in” your desires when it comes to adding upgrades that catch your eye. One of the best things you can do, however, is talk to your builder about what you want within your budget—and let him draw on years of experience to find alternative ways to get you the most home for your money!