5 Ways Building a New Home Can Affect Your Personal Finances

Written by  //  September 25, 2015  //  Financing  //  Comments Off on 5 Ways Building a New Home Can Affect Your Personal Finances

Buying a new home is expensive, but building a new home can be just as if not more expensive. When you think about the cost of building a new home, you probably focus on one thing: your mortgage loan. And rightly so! Your overall mortgage will constitute the bulk of the money spent on your new home.
When it comes to the construction loan for building your home, there are two basic options:

  1. You apply for and obtain the loan yourself.
  2. The builder obtains the loan and then sells the property to you once building is complete. According to Sente Mortgage, a home finance company that specializes in mortgage loans in Austin, Texas, at this point, you would acquire a mortgage loan to buy the property if you haven’t already.

Either way, between the down payment and monthly payments, your loan will be your biggest expense. That’s not to say it’s your only expense, however. Many people in the process of building a home are caught off guard by other fees. Here are four other ways that building a new home affects your personal finances:


If you were to buy a pre-built home, you would have to pay for an appraisal and home inspection. But when constructing a new home, the inspection process becomes more complicated. Between paying for building permits and a range of property inspections, your costs may raise higher than anticipated. You may even have to have it inspected and appraised again after your home is completely built to gain an accurate cost of your home and to ensure it is truly up to standard.


Odds are, you’ll have to hire an excavator in addition to hiring a builder. This person will have to test soil samples and ultimately excavate the earth on which your home will be built. This will need to happen in order for the builder to set the foundation for your new home. This ensures stability for your home so that everything else can fall in to place as you want it.


If you are building in town and in a pre-existing neighborhood, utilities for your home may not be very complicated. But that doesn’t mean that connecting your home to electric, sewage, cable, and gas lines will be cheap. If your home is being built out of town, this process will become more expensive.


Once your home is framed, built, and finished, you may think the project is complete. Don’t forget that you’ll have one remaining task: landscaping. You may opt to do your own landscaping, but even that will require the cost of tools, seeds, plants, fencing, etc. A good choice may be to perform your landscaping in stages, so you don’t have to deal with one large, up-front cost.

No matter how much you prepare, unexpected costs are bound to creep into your new home build. That’s why most experts recommend you plan for an additional 10% of overall costs—simply for unexpected fees. Now that you have a better idea of what to expect with a new home build, you can decide whether it’s the right choice for you.

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