15 Aug Setting a Realistic Custom Home Budget
Planning out your dream home is an exciting time. You’ve probably been clipping floor plans and photos out of magazines. You might have started perusing websites like HOUZZ and started a board on Pinterest, but have you started thinking about your custom home budget?
When it comes to setting a realistic custom home budget, it’s important to know what you’re getting into before you actually start looking at numbers. Understanding the costs associated with a custom home beyond the costs of appliances, labor, and materials can help you set a more accurate budget. Afterall, you don’t want to have a number in mind only to learn that it’s far too low for what your dream home will actually take.
Below, you’ll find a few of the costs that are often overlooked in the budget creation phase of the home building process. Make sure you understand these costs and never be afraid to ask your custom home builder about them and how you should best budget for these unexpected expenses.
The lot you purchase will have a major impact on your overall budget.
When it comes to your custom home budget, one of the biggest purchases often overlooked and unthought of is the actual lot your dream home will be built on. Purchasing your custom home lot is one of the very first steps in the process. When considering your lot, you also need to consider how the land will be paid for. Are you paying out of pocket for this expense or is it going to be part of the money you take out for your mortgage? If your custom home budget is based solely around your approved mortgage loan, then you’ll need to factor in the cost of the lot when setting your budget. This means you’ll need to subtract that price of the land from the mortgage loan amount and then start working on how much you have for materials, fees, labor, and other important parts of the custom home building process.
Think about resale value as you look at floor plans and upgrades.
This is your dream home, so selling it before you even move in is probably not at the top of your list of things to consider. However, every decision you make during the custom home budget phase and the actual building phase plays into the eventual resale value. What you think makes for an amazing home may in fact only be true for you. If and when you go to sell the custom home, you might have difficulty because no one else wants that feature. Yes, this is your dream home and you want it to match your personality and style, but it also needs to have a universal component. As you set your custom home budget, consider floor plans and upgrades that aren’t so unique others won’t appreciate them.
There are hidden costs associated with a custom home budget.
Getting caught up in your project and the possibility of your dream home is incredibly easy. There are so many decisions to be made and so many options to choose from. While this is an exciting time, it’s easy to let the excitement be a pitfall. As you set your preliminary budget, you need to factor in other costs aside from materials, labor, and those amazing upgrades you want for your kitchen and bathroom. You have to factor in items like hooking up utilities, landscaping, inspections, and even permits. These items are often overlooked until the last minute and then you’re scrambling to find the money you need to cover the associated costs. Remember to keep these fees and costs in mind and allocate the appropriate amount for each.
Make a list of what really matters to you in your custom home.
As someone who doesn’t regularly build homes, it can be difficult for you to understand the obvious and underlying costs of the features you want in your custom home. The custom home builder you hire will be able to help with that. However, you can begin the process by making a list of what really matters to you. When you think about your custom home, what features does it have? A home theater in the lower level? An outdoor living room? An open floor plan? A bathroom for every bedroom? After you’ve made a list of what you want, consider which things are the most important to you. For example, if you had to choose between an outdoor living room and a bathroom for every bedroom, which would you choose? Thinking about these choices will help you trim your expenses, if you need to.
Setting a realistic custom home budget all comes down to how much you have to spend and what you’re willing to spend. If you’re looking for square footage, you might have to sacrifice some of the features and upgrades you’re looking for. If you’re looking for a state-of-the-art home, then you might need to build smaller. At Michael and Associates, we work with all of our customers to help them set custom home budgets that help them get an accurate understanding and expectation of what building their dream home will cost.
Are you ready to start turning your dream home into reality? We would love to help! Contact us to get started.