The Budget
So you’ve decided that you’re going to build a new home.
With a task this monumental, where do you even begin? Do you try to find a builder? Do you start looking for a house plan? Do you purchase a building lot? --- Actually, the first thing you should think about, before you begin to spend any money, is setting a budget.
The reasons for this should be pretty obvious, so I’m not going to pound it into the ground. Simply put, your budget is how much house you can afford. More specifically, your budget represents the maximum allotment for the entire building process. In essence, you are limiting yourself by saying “I will not spend more than $xxx,xxx.”
Your budget will prove to be your guiding star throughout the entire building process. It will help you figure out how big your home should be, how luxurious your furnishings can be, and even what style you should go with. You will be consulting with your budget on almost every single decision (and homebuilding is all about decisions!).
I shouldn’t have to say this, but it is very important that you adhere strictly to your budget once you have set it. The act of building a home has proven to bring a lot of stress into any marriage, but this stress increases significantly when you throw in an over-shot budget. Besides, it’s a hassle to have to go to all of the trouble of getting a bigger loan.
You might have heard several horror stories about over-shot budgets, but I’m going to let you in on a little secret. I call it THE 20% RULE. Whenever you get an estimate for any cost, add 20% to that estimate -- that’s probably what you’ll end up paying in the long run. When you’re getting bids from builders, add 20%; when you’re estimating landscaping costs, add 20%; seriously, add 20% to every estimate. It may be hard to watch that much of your budget sit unused, but believe me, you’ll be glad you set that money aside. There will always be hidden costs, and there will always be unexpected expenses. If you’re lucky, that extra 20% will ensure that you come out even.
When all is said and done, life will be MUCH happier if you set a budget at the very beginning and stick to it! Please stay tuned over the next few days and weeks. I will be telling you everything I know about how to find your Dream Home. (In the meantime, remember to set your budget!)
