Building a new home is incredibly exciting, but it’s not an easy project to take on, especially if you are new to it. There can be a lot of hiccups along the way, particularly if you don’t choose the right contractor for the job. While you may have a clear picture in your head of what you want, it helps if you take the time to plan carefully and budget for your new build.
This can save lots of time and money in the long run, and help you to avoid common mistakes made by first timers. From how to finance your home to how to choose the right contractor, these tips will help you get the most out of your exciting new project.
Financing your new home
If you have started thinking about how to finance your new home, you have likely considered getting a mortgage. Most people have a basic understanding of how it works, so it’s an easy option to go for, especially as most homeowners have one. The loan usually lasts for 30 years at a fixed rate, and you will be expected to make regular payments, including interest.
However, if you are building a new home, then you may want to consider a construction loan. While a mortgage can be thought of as a traditional loan, a construction loan is more like having access to a sizeable credit card for the duration of the build, usually about a year. You will have a line of credit up to an agreed amount. When you need money to start the project, you submit a draw request to your lender. It’s at this point that you will have to start paying interest, which will only be on the amount you have drawn.
Once the build is complete, you will need a mortgage for your newly constructed home, covering the balance of your construction loan. In addition to the conventional mortgages there are also loans known as portfolio loans, and the interest rate is calculated differently, determined on various factors such as your income, financial history, and credit.
Choosing the right contractor
When it comes to selecting a general contractor, you need to make sure that you find someone with a good reputation, which you can trust to complete the job to a high standard. Remember, you’re going to have to spend a lot of time with this person, typically between nine months to a year, so make sure that they are someone you can depend on and get along with. Take the time to find someone with a good reputation; look for testimonials from previous clients to get a good sense how they work.
Always pick trusted contractors, even if they cost a little more. If you choose someone inexperienced, then it will just end up costing you more in the long run. A lot of things can go wrong, from facing stressful delays in the construction process to going way over budget or not following proper inspection and code procedures. By hiring someone with experience and a good reputation, you can rest assured that the job is in the right hands.
Keeping your project within budget
One of the most common mistakes made when building a new home is going over your budget. This can easily happen since many people don’t include important factors in the initial calculations and problems can arise during the build that means you have to spend more than you wanted to. This is why it’s so important to choose the right contractor; you need someone who will minimize the risk of potential problems cropping up and who can also work with your budget.
You will also need to be strict and focus on the things that you need. Consider how much space you need and which areas in the home you are likely to use. It’s all about knowing when to splurge; don’t be afraid to pay for quality materials if it makes a difference in the long run. However, avoid spending your money on things you don’t actually need, unless you can afford it.
While it may be tempting to install a home cinema or even just make minor upgrades along the way, these enhancements can end up costing you a fortune if you add it all together. It’s the easiest way to go over your budget, so try and control your spending where possible.