5 Things You Need to Know About Building Your Dream Home
Congratulations! You’re ready to build your dream home.
You’re ready to build your dream home. Now all you have to do is hire an architect, find a builder and you’ll be in your new home in no time. Right? Not quite. There are a few things you need to know before getting started that will keep you financially safe as you build your new home.
Will Nixon, construction mortgage loan officer at Zions Bank, has 16 years of experience in the industry. He offers these five tips for anyone preparing to start the process.
1. Prequalify for a Loan
Getting prequalified for a loan before you do anything else will help you establish a budget and can help eliminate surprises down the road. “You can’t design a home with your architect until you know how much money you have available to build with,” Nixon says. “I see clients who have finished plans that they’ve paid thousands of dollars for only to have to cut them down because they don’t qualify for the loan they would need to build the home.”
2. Know the Market
Right now, costs to build a home are quite high. For example, depending on location, new high-end homes in Utah can cost up to $200 per square foot or more, Nixon says. Educating yourself about the construction market, including costs of materials and subcontractor fees, can help you make wise choices.
3. Choose the Right Professionals
A good architect, builder or interior designer can do a lot to help you stay on budget. Work closely with professionals you trust, and clearly communicate your expectations about cost and timeline. “Architects can do things that cost a lot of money, or they can design your house less expensively,” Nixon says. “For example, curves on the exterior cost more than simple straight lines.”
4. Save Money for Later
When Zions Bank finances a new home, it requires future homeowners to create a contingency fund for cost overruns. “Someone who starts with a certain contract could end up paying 15 percent more by the time the house is finished,” Nixon says. “Sometimes when it comes time to order materials, prices have increased since the initial bid. Sheetrock, cabinets — everything is more expensive than it was three years ago. You need a contingency fund unless you’re prepared to just write checks.”
5. Hire a Good Builder
Many homebuyers make the mistake of hiring the builder who gives them the lowest bid because they think it will save money. However, this can result in more problems down the road that are costly to fix. “The cheap guys will give a low bid to get your business,” Nixon says. “Then they’ll say, ‘Sorry, the prices have gone up.’ You’re stuck, and you’ll end up having more headaches as the process moves forward.”
A tip from Nixon: If you want to hire a certain builder, ask for the addresses of some of the homes he or she has built. Then knock on those doors and ask what the homeowner’s experience was like.