Building a House:
Where to Begin?

Building a house is one of the biggest expenses, thrills, and stressors of life.

There are a lot of things to consider when starting on this journey.

Planning is the most important aspect to help ensure a smooth process that is relatively worry free.

The important aspects of planning are detailed below.

building a house

#1. One of the first things to consider when starting the process of building a house is your ability to secure financing. Financing has really changed since the housing meltdown. You will need a construction loan in most instances, and some banks have stopped offering these loans because they are higher risk.

The entire financing application process can take a significant amount of time to get all of your documentation and get approval from a lender. This is a really critical step because lenders will determine a payment schedule as well as an amount, and the builder that you are using is going to need to work with this payment schedule.

#2. Once you have an approved budget, it then is time to start on the lot and plan selection. Lot costs vary widely depending on the size and location of the land.

When selecting land, it is important to find out how much the "improvement" of the land is going to cost. This cost needs to include things such as clearing, power service, water and waste water cost, as well as a driveway and grading. These costs can really add up and need to be taken into account so that you can accurately figure out how much money you will have left for the actual structure.

#3. Get a solid set of plans. Building a house means careful planning with a trusted architect or draftsman. Now that you have a budget in place, clearly articulate your budget to your architect or draftsman to ensure that you are building something that is within your budget.

#4. Get a clear understanding of the local rules and regulations in regard to setbacks and design restrictions. Most neighborhoods have specific requirements. Get familiar with them. It is much cheaper to design a place right the first time instead of going back and needing to make changes to the plans.

#5. Finishing materials are the next consideration at this point. One of the best ways to handle this aspect is to set up an allowance structure with your builder. By setting up specific budgets for items such as appliances and fixtures, it will allow you to determine where you want to spend the money. For example, do you want to buy a huge tub/shower and get cheap faucets or do you want to compromise and get middle-of-the-road items of both?

This is a general overview of building a new home. From here, you'll have furnishing and other odds and ends but typically if you can afford these expenses without financing them, then you will save money--and stress--in the long run.

Learn about home building insurance here.

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