This is the first of a two-part series on constructing your dream home. Be sure to check back on Thursday for the next post.
Thinking about taking advantage of today’s lower construction costs to build your dream home? One of the first steps is to make sure you’re financially prepared. This means doing your homework and planning ahead. Before you hire an architect or start picking out tile, it’s best to determine a budget for your project. We know there’s a lot of work ahead, but knowing where you stand financially will make each step of the home building process easier to manage. Here are some tips to help you get started:
● Brainstorm what you want in your “dream home.” Write down all the features and functionality you want from your new home. How many bedrooms? How many baths? Do you want a two-car garage, or something bigger? What kind of appliances do you want in the kitchen? How about a fireplace or pool? Visit some open houses for ideas.
● Now divide your list into three categories based on your priorities: (1) must have items, (2) want to have items, and (3) nice additions. This step can be difficult, but it’s critical to help you develop a realistic budget. This may be your “dream home,” but the reality of paying for it requires setting priorities early on in the process.
● Take a look at your finances. Gather your financial documents, bank statements and current debts. Have a rough estimate in mind for the amount you can put down and the amount you want to borrow.
● Talk to your banker. Make an appointment with a loan officer experienced in custom construction financing. Ask them to go over your initial estimates and answer any questions you may have regarding financing and the loan approval process. You may want to be pre-approved so you know exactly what you can afford. Compare the different types of loans available. Will there be one loan for construction and another for permanent financing? Will your interest rate change?
Of course, these are only the preliminary steps in building your dream home; the real fun has yet to start. Make sure you come back on Thursday as we discuss the next steps, including meeting with the architect and following the plan through to completion.