Building a brand-new home is an exciting experience for you and your family. You can choose or design a floor plan that works for your unique needs, select your finishes to personalize your home to your style, and benefit from not having to fix old appliances or do repairs for a long time.
But those perks aren’t free, and ensuring you stay on budget means making the right decisions from the beginning.
Know Your Limit
This may be an odd thing to consider first, but if you’re like most homeowners you don’t have an unlimited budget. Knowing and understanding how much home you can afford – and how much mortgage you qualify for – will help you every step of the way throughout your new home build.
It’s best to get pre-approved for a mortgage before you make any other major decisions. It would be heartbreaking to fall in love with a home design only to find out it’s outside of your budget.
Make the Big Decisions Upfront
When you’re designing or selecting your floor plan, you’ll want a layout that fits your family’s needs. Take your time with this step, because any adjustments you want to make should be done before construction even begins.
If you decide to change something after construction has started, there could be fees for changes in addition to the costs of redoing work to your home, or you might not be able to do them at all.
The same goes for selecting your finishes. Be aware of your budget when choosing your countertops, flooring, fixtures, and even your exterior selections, as the pricing varies with the quality and rarity of the products. Materials like this typically need to be ordered in advance, so if you change your mind after an order has been placed, there may be additional payments to change the product (not to mention additional time added.)
The more definitive your choices are in the planning stages, the better for you, your budget, and the home builder.
Day-to-Day Living and Maintenance
Be sure to get an estimate on how much your home will cost to run and maintain. Water and power bills, annual maintenance needs, and property taxes are all items to consider in your budget. Having an idea of the amounts for these items before you build will help you to control your finances better once you move in.
And don’t forget about moving expenses. If you choose to use a moving service, this is something to budget for, as well as the boxes and materials you’ll need to pack your things.
Closing Costs On Possession
Some fees need to be paid on the closing of your new home. These fees can’t be included in your mortgage, so you’ll be expected to have these funds ready before you’re handed the keys to your new home.
These closing costs include things like lender fees (if applicable), legal services, land transfer taxes, outstanding property taxes, and any outstanding amount owing if there were changes to your home during construction.
On average, expect to budget approximately 2.2% of your home’s total value at closing. Your home builder and closing attorney can help you determine the amount expected on your new home.
Window Coverings And Landscaping
These two items are commonly overlooked when planning your new home! If your builder or lender doesn’t include these items in your mortgage, you’ll want to budget for this after you move in. If you’re planning to have custom window coverings made, you need to start this process in advance so they can be installed right after you move in.
New home construction is a process, but planning everything in advance will give you the best advantage over unexpected costs. Communication with your home builder throughout the process is important and ensures both parties are on the same page with what’s expected. Although there may be added costs to building a brand-new home, it is worth every penny to have a home that is designed and built just for you.
