Building Your Own Home? 5 Financial Tips for Success

Written by  //  June 16, 2017  //  Home Construction  //  Comments Off on Building Your Own Home? 5 Financial Tips for Success

Building your own home is a dream come true for many people. It can also become a gaping abyss that swallows huge sums of money. It doesn’t need to be that way, though. With some forethought and careful planning, you can build your home and keeps costs reasonable.

Scale It Down

There isn’t any harm in thinking big when you sit down to design your dream home. When you go to build a home, it pays to scale it down. The national average per square foot to build a new home is around $125. That means you stand to save $12,500 for every 100 square feet you shave off the total home size.

Build in the Off Season

This does depend on the region you live in, but starting in the winter can save you some money. Winter is typically the slow season for construction companies and their subcontractors. That often means you can negotiate better rates simply by virtue of providing work. If you live in an area with unpredictable or harsh winter conditions, though, you’re potential savings will probably go to plowing services.

Getting a Construction Loan

Getting a construction loan closely resembles getting a mortgage. You apply with a lender. The lender assesses your finances and then approves or denies the loan. Most people choose construction-to-permanent loans, where the lender funds the construction and automatically converts the loan to a mortgage on construction completion. This lets you lock in interest rates and avoid additional fees. The other option is a stand-alone construction loan. These loans only cover construction and usually come due at home completion. You’ll need an independent mortgage to cover the loan, which means a new set of fees and closing costs. The upshot is that mortgage interest rates may change in your favor.


If you’re a serious do-it-yourself type with some real skill, you can save money by taking on any number of tasks yourself. You could put down flooring, install cabinets and take on painting the walls. Core pieces of home infrastructure, such as plumbing and electrical, should always be left to the professionals.

Plan with Resale in Mind

Every custom home tends to have a few idiosyncrasies, but take some time to consider how features will look to potential home buyers. Not everyone will be impressed with that dedicated library space lined with immovable shelving. The more offbeat your home’s features are, the more likely it is that you’ll have to drop your price to sell it later.

Building your home can be an unpredictable financial process, but you can take exert some control over it. Scaling down even a little can save you tens of thousands of dollars and still leave you a spacious home. Taking on some tasks as DIY projects and starting in the winter can trim subcontractor costs. Choosing a construction-to-permanent loan can let you lock in favorable interest rates from the start. Planning with resale in mind may convince you to leave off exotic features that would harm resale value. Putting all of these together can save money up front and earn you more in the long run.

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