6 Ways to Stay on Budget When Building or Remodeling a House

  • By Jeremy Thompson
  • 15 Feb, 2017
One of the first questions a new client asks is “How much will this cost me?” Yet the answer isn’t always clear cut. When it comes to home construction, not only do we face the “unforeseen” — those situations we didn’t plan for when we started the project (e.g. wood damaged by a hidden insect […] The post 6 Ways to Stay on Budget When Building or Remodeling a House appeared first on J. Thompson Builders.
One of the first questions a new client asks is “How much will this cost me?” Yet the answer isn’t always clear cut. When it comes to home construction, not only do we face the “unforeseen” — those situations we didn’t plan for when we started the project (e.g. wood damaged by a hidden insect problem) — but the plan often changes during the process because, for example, the clients decide they prefer a higher end product over the mid-range one we initially discussed. But there are some ways to stay close to your budget by factoring the realities of home construction into the plan.
  1. Have a plan! Seems simple enough, but yet often construction starts with many of the decisions deferred until later in the process. Make the decisions up-front, and you’ll stick closer to the established budget.
  2. Include contingency in your plan. Become some costs are unforeseen, it’s better to plan for extra costs, just in case. If you don’t need it, it means you come in under budget. Bonus!
  3. Skip making changes — unless they lower the expense. Changes in materials or adding more work to the project costs more money, and can add up rather quickly. Often the thought is “we might as well add this on…” because “this” may only cost a few hundred, but adding little items to the project adds up quickly. Stick to the plan.
  4. Identify all costs you plan to incur. Keep in mind a construction plan not only includes the cost of building or renovating the home, but also decorating, landscaping, moving costs, temporary housing and a host of other misc. costs you can incur when remodeling or building.
  5. Don’t sweat the small stuff. Sometimes the perfectionist in us comes out, and we focus too much on small details, adding extra costs and energy to the project. But in the big picture, consider if it really matters. Often it doesn’t, and you’ll be just as happy or less likely to think about it in the long term.
  6. Keep the lines of communication open with your contractor. The more the contractor knows about your priorities, and budget limitations, the more the contractor can help you make and stick to a plan.
Overall, keep this in mind: The more specific you are in planning, the tighter your budget remains.

For more tips on building a custom home or remodeling a home follow us on Facebook and Twitter

J. Thompson Builders Blog

By 7052540976 15 Nov, 2017
Some of these considerations may not be in the forefront of your mind, but there is a long list of aspects you need to consider when building a new home. These should help to get you started thinking about some of the most important pieces of the home building process.
By 7052540976 15 Oct, 2017
This home is being built with our client’s specific wants and needs in mind. The homeowner
requested a single family home with a modern contemporary house design. Previously, he lived
in a townhome and desired a more private, spacious residence. A main floor living with a large
space to entertain and big volume ceilings were a must on the client’s list.

The client decided building as opposed to finding a pre-existing home was a better solution for
him because he wants something specific to his needs. He already had the perfect location in
mind and it was time for him to own his dream home.

The area is ideal for this client because it allows him to live in close proximity to his hobbies and
interests and it also allows him the ability to walk to nearby restaurants or bike to the
surrounding shops. This homeowner will be close to everything. He truly loves the location!
The design concept picked is pictured below. In sticking with a contemporary influence, the
design has clean, simple lines that will result in an extraordinary modern home. We combined
elements of residential and commercial materials and design to bring our client’s unique requests to life.
By 7052540976 15 Sep, 2017

You decide that you are ready to build a custom home for you and your family. Now it is time to figure out how to finance your dreams!

Let’s start with the basics. As with any loan process, do your research. Talk to several mortgage companies that specialize or have a strong understanding/history of working with construction loans. Ask questions and voice your concerns. Companies of course want your business, but they also want to make sure they are a good fit for you and what you are wanting to accomplish. Reviews and referrals are strongly regarded these days. They want to make sure you have the best experience possible.

There are several main differences between a construction loan and a regular existing home loan. An individual construction loan may require a longer credit history  or a higher credit score as well as more money down and along the way. It is more of a process, but it is most certainly worth it. With the right builder, the more involved process becomes a piece of cake; but, that is an article for another time.

Home loans can have a 30 year term whereas a construction loan typically has a max of 1 year. “The rates on this type of loan are higher than rates on permanent mortgage loans. To gain approval, the lender will need to see a construction timetable, detailed plans and a realistic budget, sometimes called the “story” behind the loan,” as reported by  bankrate . While your home is being built, it is typical to make interest-only payments. 

If you are thinking, “I don’t have enough money to pay off a newly built home in 1 year!” Don’t panic.

A popular option is the construction-to- permanent financing sometimes called “one-time close,” a “single close,” or an "all-in-one" loan. Upon completion of construction, the remaining loan balance is converted into a permanent mortgage with terms up to 30 years. Like most loans, “the rate and other terms of the permanent mortgage are set up-front when the entire loan package is closed” according to the  National Association of Home Builders .  Construction/permanent loans are offered by many different lenders, including banks and mortgage companies and are a great option for those of us wanting to finance their home purchase over an extended period of time.

Another option is a stand-alone construction loan. This type of loan can be beneficial if you currently own your home and want a smaller down payment option.   Read more about stand alone construction loans.

There are many different loan options. What makes sense for one person doesn’t make sense for everyone. Make sure you find the right product for you and your particular project. If you want to talk over some options, contact us! We would love to hear your ideas and figure out how we can build your dream home.

View our work , read our reviews on Houzz.com , and visit our Facebook page to get inspired!
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