As the economy improves, you might be thinking about buying or building a new home. Sometimes, the easiest way to get what you really want is to start from scratch. If you’re going to buy and then remodel a home, why not just get what you really want from the ground up? It’s an exciting concept, but it’s also one that can get out of hand if you’re not careful with your pocketbook. Here are some smart finance tips for new construction.
Communicate with your spouse
This probably doesn’t seem like it has anything to do with finance, but when it comes to new home construction, it has everything to do with it. People will tell you that building a new home is always more expensive that you budgeted for. You’ll ask for a loan, and then you’ll discover that you didn’t ask for enough. How does this happen? Lack of communication. You tell the contractor to make the counters granite. Your spouse really wanted something else. This disclosure usually happens after the granite has been put in. Now you’re paying twice.
Bank Locally
Construction is a trying process. Contractors can be a huge mystery. If you’re going to ask a bank to finance your home project, also ask who they recommend as a home builder. What they tell you has everything to do with reliability. Basically, they are going to recommend the guy who pays his bills. Why do you care? If he isn’t paying his bills, his supply line gets cut off, and you’re weeks behind on your new home construction while he sorts out his financial problems. Local banks also have a better idea of the cost of construction in your area. They’ll help guide you in asking for the right amount of money.
Open a separate construction account
Put the money you finance your construction with in a separate account so that the bookkeeping is easy. If there’s money left over, give it back to the bank and get a head start on paying off your loan.