Building your own house can be extremely exciting, but it can also be a source of a little extra stress and financial strain.
Whether you’re currently in the midst of the building process or you’re planning the home of your dreams, there are some things you can do to save money during the process.
This guide can help you save some extra cash while you build your dream home, so read on for a few helpful tips that will fatten your wallet even during the construction phase.
Set Your Goals and Save
A 20-percent down payment isn’t a must, but it’s a good goal to have when it comes to buying and building your own house. While you’re working on your dream, set up a savings account and start squirreling your cash away.
When you make a larger down payment, you can avoid added costs in the future like PMI, or private mortgage insurance. Look for a high-yield savings account or money market account that will help your cash grow faster.
Every month, you will accrue additional interest payments towards your savings that can help your money grow. If you happen to get a windfall, add that to your savings as well.
A windfall can be anything from an inheritance to a tax refund or a bonus you get at work. Remember to track every penny you save and add it to your account whenever you get a bit of extra money.
Up Your Income
Sure, we all have busy lives and jobs to do. But when you’re saving for a home, the more money you can make, the better off you’ll be.
Consider working a “side hustle” whether it’s selling some items on eBay or hosting a yard sale. Think of creative ways you can make extra money throughout this process that will help you make the most of your free time.
Look at ways you can cut back on costs, like your cell phone data plan or cable bill. Cancel memberships and recurring costs you don’t use anymore, and you’ll be surprised at how much you can save.
Once you’ve gathered a way to increase your income and cut costs, take that money and add it to your savings. You can even do small things like bring your lunch to work and stop going to Starbucks.
Every penny counts when you’re trying to save money to create a budget you can track. A good budget will help you visually see exactly where your money goes every month. It can also give you better insight into the areas where you can cut back.
Consider downsizing into a smaller apartment while you’re saving. It will be a bit tough, but you can save considerably in the long run. Remember that this change is only temporary but it can do a lot to help you achieve your goals.
Understand the Costs of Building Your Own House
In order to save money, you need to have a full understanding of the costs that come with building a home. From buying land to processing construction loans, these costs can really add up over time and might surprise you.
The construction loan process is much different than a traditional mortgage. Learn terms like liens and lien waivers, and talk to a local lender who can walk you through the process.
One of the most important things you can do throughout this process is to find a financial advisor you trust. They should be able to walk you through every stop from securing a loan to closing.
Ask for transparency of all fees and interest rates in advance so you can be better prepared. Include things like your downpayment, closing costs, and any payments you’ll need to make before the home is complete.
For many borrowers, they’ll need to pay on the construction loan as the builder works on the home. Make sure you have ample money to make these payments even while you’re renting somewhere else.
Getting a good grasp on the financial side of the construction phase is key to your success. Don’t be afraid to ask questions along the way so you’re confident that everything is going smoothly.
Use Your Negotiating Skills
Just because a builder gives you a quote, it doesn’t mean you have to pay the full price. Use a few negotiating skills to see what kinds of upgrades you might be able to get.
Some builders will throw in extras like upgraded appliances or countertops to sweeten the deal. It can never hurt to ask, and you might be surprised at what you can get with a bit of back and forth.
You might be able to negotiate with your lender, too. Ask about lender credits and other possible ways you might be able to save on things like closing costs.
Find out if you can purchase some items yourself like lighting fixtures and hardware if that will help you save money. These little things add up, and if you have more control over the process, you’ll also have more control over your money.
Make Your Move
With a bit of due diligence and aggressive saving, building your own house can be a satisfying experience. From making money on the side to downsizing, there’s plenty of ways you can save extra cash for your biggest investment.
Talk to a lender you trust who can guide you through the financing and construction process. And of course, don’t be afraid to negotiate with both the lender and the builder so you can get a better deal.
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