Building a home is one of the most important decisions you’ll ever make in your entire life. You’re expected to build your and your family’s dreams and future upon your home. Often, your family’s next generation can still benefit from your intelligent home construction choices.

It goes without saying that planning a home construction should start years even before the first foundation is built. Still, with other things in life, not everything will be perfect. This is why careful planning and due diligence are both helpful in minimizing construction challenges and avoiding costly mistakes.

To make your home-building process less difficult, remember to ask for additional guidance from friends, family members, and professionals. Also, don’t forget to consider various factors, both internal and external in nature that’ll affect your project.

To help you out, here are nine things you should consider when planning a home construction:

1. Your Current and Future Lifestyle

No one gets involved in a new home construction without committing for the long term. For instance, a recently-married couple may have to discuss how many children they need or how many pets they’re willing to raise.

While some may argue that budget is the most critical consideration, leaving this element out of the picture is a serious mistake. Building a home that’s neither child nor pet-friendly will likely force you to make expensive renovations at a later stage. This isn’t a wise choice as construction costs experience inflation, too. Besides, your home design may not allow these changes to take place unless you’re expanding your property, leading to pricier remodeling works.

If you decide to build a room or two for your future children, don’t worry about not being able to use it in the meantime. You can always use it as a guest room or as an additional storage room while waiting for your little angels to arrive.

2. Are You Financially Stable?

Building a house takes months or even years to complete. Thus, your financial sources must be robust for several years before you could commit to building a home.

If you think there may be major changes in your financial situation in the coming years, like an impending divorce, job security issues, and an increasing current debt-to-income (DTI) ratio, it’s best to consider postponing your home construction plans. It’s true that few of these critical situations are unforeseen and can’t be predicted.

Perhaps the best thing that you can do is to save properly years prior to your home project plans.

3. Make A Realistic Budget

In order to come up with a realistic budget, study all the options for your home construction project. Compare how much you can afford and the cost of building your dream home. In some cases, it may even be more practical to buy a new one. Unfortunately, you’ll have less say in how your property looks like if it's already built–unless you want to spend for costly renovations.

Don’t be discouraged if you can’t build the home of your dreams right away. Consider building a progressive-type home, which leaves your house open for easy expansion once you’ve got enough cash to spend. Similarly, using wood is an eco-friendly construction solution that may allow you to save on construction costs. Ask your architect about these options.

Below are some tips to help you with your home construction budget:

• Talk to a financial advisor: These professionals can help you better plan your finances. In the event of a home construction, a financial advisor can assess your financial health and make some recommendations on how to keep your debts manageable.
• Create a buffer for your budget: While it’s important to stick to your budget costs as much as possible, it’s always a smart choice to set aside a specific portion of the total project costs as a contingency budget. The construction industry is also highly volatile, with materials costs fluctuating often. For this reason and for the other changes that could happen along the way, you have to set a contingency budget.

First-time homeowners may fail to anticipate the hidden costs of owning a home. Apart from the construction itself, you’ll have to think about the prices for any utility installation, taxes, insurances, and so on.

• Choose the best contractor. Seek and compare quotes of at least three contractors as part of your standard process. Don’t rush and sign a deal with the cheapest offer right away since some contractors may not deliver high-quality work or skimp on the costs of construction materials. Always perform due diligence and seek online and in-person reviews from the contractor’s previous clients.

Do note that contractor costs can take up to 25% of your total home construction project. To give you a rough idea, contractors charge around USD$45 to USD$85 per hour, depending on the state. A better cost-saving option is to pay the contractor a daily rate of USD$300 to USD$500.

4. Check Your Financing Options

Because of the hefty costs involved in home construction, most owners prefer to seek financial assistance in paying for the project. Once you have an idea of how much your dream home may cost, check your savings and budget, as well as your access to construction loan financing.

Take note that a construction mortgage approval is more challenging to get. Lending institutions will be warier in extending loans this way since they’ll be funding a project that may or may not come to fruition. As a borrower, you’ll have to work double-time to sell your concept and submit compelling document requirements.

While loan products vary from one lender to another, rates for construction loans are typically higher than home mortgage loans. Banks typically demand a higher down payment of up to 25% of the loan cost. Borrowers have the option to exclusively cover the land or the construction costs.

5. Know How Much Loan You Qualify For

Since you won’t likely have the capacity to pay in cash for the construction, asking for a construction loan early in the preparation process is imperative. While banks may be eager to pre-qualify you for a construction loan, be careful in signing up for the maximum loan amount, especially if your proposed project requires a lower price. If you fall into this trap, you may end up defaulting, and you’re at risk of losing your dream home.

Be financially prudent and borrow only an amount that’s slightly higher than your expected project cost. The extra amount will act as your buffer cost, which is typically pegged from 10% to 15% of the total budget cost. If you’ve successfully stayed within budget, you can spend the remaining amount for the fixtures, appliances, and other home decoration essentials.

6. Choose Your Location Wisely

If you haven’t purchased a lot to build your home on, make a smart decision by asking professionals for help. Real estate agents, for instance, are familiar with the up-and-coming hot spots; places where you can invest at a lower cost but with the projection to become a center for future developments.

Vacant residential lands in these types of areas are typically priced reasonably, depending on the state you’re in. Wherever you may choose to settle in, avoid locating your home near cemeteries, power plants, and other potentially dangerous areas. You may also want to avoid communities that are prone to natural disasters, particularly flooding, forest fires, winter storms, and hurricanes.

After choosing your ideal location, make sure to ask professionals to conduct tests regarding soil conditions, drainage, zoning laws, alongside other essential construction factors. Choosing land is important as your home project floor plan and overall design rely heavily on it.

7. Generic vs. Custom: Opt For A House Plan That Suits You

There are two ways to go about with the house construction plan. Most houses are built using plans from their favorite homes culled from online and magazine sources. This can help significantly reduce your project cost since an architect no longer has to start from scratch. In most cases, you may only need the help of a home designer to make some tweaks to your home design inspiration.

Inversely, a tailor-made home design is specially made for you and your family. This means you’ll have to hire an architect to determine the best home design based on your preferences, needs, and lifestyle. Speaking of lifestyle, make sure your home will be suitable for your future needs. You can even integrate specific facilities for your aging parents if you’re planning to take care of them in your home.

Discuss specific needs with your architect and home designer so that your home design will be as functional even in the long term.

8. Getting Permissions Take Time

States have different requirements. Depending on the project size and the volume of other applications lodged in the local office, getting a permit for your home construction can take several days, even months, to finish.

If you want to have an idea of the processes and fees involved, contact your local federal office for specifics. By doing so, you’ll have an idea of the start date for your home construction project. Prepare to pay from a few hundred to a few thousand.

In most cases, you’ll have to work with your contractor to get these things done. Remember that you’ll have to transact with several other federal agencies to make sure your project is lawful and abides by the local building codes. Apart from construction permits, you also need to obtain permissions for electrical, plumbing, and other utilities.

If you fail to secure all the permissions needed to build your home, you may have to face legal issues down the road. Take note that government agencies would need to periodically check on the progress of your project to ensure local laws and ordinances are being followed.

9. How To Choose The Best Contractor

Hiring the best home builder is key to any project success. If you’re doing this for the first time, you can seek the help of friends and family members who’ve had experience having their homes built. You can also check online reviews about the contractor, but focus on non-biased sites to ensure they’re not part of a paid marketing campaign.

Remember these key considerations when choosing the best home contractor for your project:

• Seek a local contractor: As much as possible, opt for a local contractor. There are numerous benefits to choosing one. For instance, they’re familiar with the local building codes and the permits needed to get the project going. In the same manner, they know the stores that sell reasonable construction materials, helping you save on your building costs.
• Ask for references: Before committing to a home builder, ask for references and reach out to them for an initial assessment of each of your chosen contractor’s works. Ask their former clients specific questions about their experience in working with the contractor.

Also, ask for the problems and delays they faced, and how the contractor handled these specific challenges. Finally, ask the client if they’ll hire the contractor again if another home project crops up.

• Ensure that your contractor is licensed and insured: Your contractor should know what they’re doing and have the licenses to show it. In order to practice their craft, builders and construction workers will have to pass licensure tests and undergo training. To have an idea of their capacities, ask your chosen contractor for their specialties and experience.

In addition, the construction industry is one of the most dangerous sectors. According to the Bureau of Labor Statistics (BLS), the private construction industry in 2019 reported 1,061 fatal injuries. This figure represents a five percent increase from the previous year, and the second-highest number of fatalities since 2007.

It’s not surprising that almost all states require construction companies to have their workers insured. Homeowners can ask for a contractor’s insurance coverage and other permits to make sure that they’re experienced and legitimate.

• Ask for a written contract: Don’t forget to ask for written copies of your agreement. The documents should include the plans and other detailed specifications of the project, especially its scope of works. The more specific it is, the better. Don’t forget to have it updated in case of any changes along the way.

Include the payment schedule and the materials needed, as well as the projected cost and the start and end dates.

Bottom Line

You and your family need to have a home that you truly deserve. Embarking on a home construction helps you achieve your dream home, but it does come with a few challenges.

Knowing what needs to be considered will help you prepare for a more seamless home construction. In addition, choosing the right home builder can also help you reduce the stress that often goes with these projects.