When building a new home, every homeowner faces the challenge of creating a realistic budget—and then sticking to it. One thing that causes a lot of homebuilders financial heartburn is when they make changes after the contract has been signed.
They get into the middle of the process and realize that there is something they really want to add—but it’s not in the budget. That’s when they do a mental head slap and ask, “Why didn’t I think of that?”
I’m not talking about a complete redo of the design or having to redraw plans. I’m talking about some minor modifications and perhaps some upgrades that will make the home more enjoyable and comfortable. But if your budget is set, you may feel like you have to forego them.
How can you get around that? Here are two important areas where you’ll want to focus some attention.
Take Your Time Up Front to Plan
Building a new home isn’t something you do every day. There are a lot of details to consider, and many of them aren’t things you’re used to dealing with regularly. Don’t rush the process. Sure you’re excited to see your new home come together but take time to select the plan that’s right for you. Walk through the floor plan in your mind. Think about how you’ll use the space.
Think about features that are essential for your family’s lifestyle. You may even want to create a priority list of things that are: Essential, Nice to have, or Splurges
Then take time to talk to your builder. Share what you have in mind. If there are features or upgrades you think you might want, ask your builder. He or she should be able to tell you how adding these features will impact your budget. And you may pick up some ideas from your builder based on what others in your situation have done.
Create a Contingency Component in Your Budget
If you talk to a builder and reach an agreement about what the home you’ve chosen will cost, it’s a good idea to build in a contingency component to your budget. You could look at this as building in a little “wiggle room” in your budget that can compensate for unforeseen expenses. For example, when you’re selecting your flooring, your builder may tell you that, for a little more money you could upgrade to a material that will look better and last longer. If your budget is so tight that it can’t accommodate that, you can lose out on an opportunity to get significantly more quality and comfort for relatively little money.
The same thing can hold true for making a slight change to the plans. Adding some square footage to a room is a lot cheaper if you make that decision before construction begins. If you make that change later (or add space a couple of years down the road) it will cost you a lot more. But you have to have room in your budget for this kind of change. How much should you allow? It’s not unusual for homeowners to allow anywhere from 10-20 percent extra for unforeseen changes. And if you don’t spend it, you have it available for decoration or landscaping.
So don’t slap your head after the fact and say, “I wish I’d thought of that!” Take all the time you need to review your plans up front to make sure they will meet your needs. Then build a little cushion into your budget so that you can make important changes without the fear of blowing your budget.
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