The average cost of building a 2000 square foot dream home ranges from between $146,968 and $438,441 according to a Homeowners report. While this cost is determined by several factors, house design bears the largest impact. This means the design phase is actually the most critical stage of any dream home construction project. However, with so many exquisite home designs to chose from, most budding homeowners usually find themselves in a conundrum. This is because, while trending designs might be alluring, they come with an added cost. If you want to build a home inspired by the latest trends – mixed metal finishes, artisanal fixtures, rich color palettes, etc., you might find the total sum involved too high. This leaves you with two choices: to either push the project, or change its concept in a bid to cut down expenses. Thankfully, if neither of these seem like viable options, there are alternative ways of finding the extra cash you need to fund your dream house project.
Get A Construction Loan
After getting the plot to build your new home on, you should consider getting a construction loan. The loan is meant to help you when paying for the construction process whereby the bank fronts you almost all the money required to see the project to its completion. There is, however, an understanding that you should pay the loan once your home is complete. The house is used as the construction loan’s security. Therefore, as a loan borrower, you have to be extremely careful before taking it. There are certain things you ought to be conversant with before borrowing a loan. These include how you can access the loan, your loan options, your loan limit, the loan repayment schedule and all resulting charges from both interest and fines due to late repayment. The last two are especially important, as two key things about construction loans are that they are short term and have higher interests compared to other loans. You should also make sure that the payment stages you are giving the builders set to do the contract are matching with the payments you are receiving from the bank. Failure to do this will lead to a situation where the contractors are demanding money you don’t have, conflict and eventually a standstill in the building process.
Get A Home Equity Line Of Credit (HELOC)
Home Equity Line of Credit is a loan that helps you cover large expenses, and in turn, uses your home as security. It is also used to help you in consolidating debts with higher interest rates like credit card debts. A home equity line of credit comes with some benefits. For instance, it allows you to borrow a loan against another loan, and it has lower interest rates when compared to other loans. You can as well borrow as little or as much money you want. Nevertheless, it is not without its drawbacks. For you to access such a loan, you need to have readily available equity for your dream home project. This means that the amount you are borrowing should be less than the value of your home.
Take A Home Equity Loan
A Home Equity Loan is also referred to as a second mortgage. It is given by a mortgage lender to a prospective homeowner. As usual, the constructed house is used as security. The good thing about these type of loans is that you are given 85% of the equity of your home. If you are still paying your first mortgage, you can pay the home equity loan monthly while you are still paying the first mortgage, hence the name “second mortgage”. You can take this loan after running out of the other funds you were using while constructing your home. You should, however, make sure that you are capable of paying a second mortgage on top of the first one.
Spend Less & Save More
When you have good planning and a careful saving process, then getting your dream becomes easier, and happens sooner than you may have thought it would. You should first calculate the amount of funds you will need for the construction process then begin from there. Next, ensure that you have opened a fixed savings account specifically for your home-building fund. Make efforts to increase your savings by trimming your monthly budget. For instance, you can cancel the daily gym programs and learn to exercise at home. You can also consider carrying packed lunches from home to your office instead of ordering out. Finally, if you are paying a high amount of rent, you can try and rent some cheaper place to live while you put the extra money into your dream home savings account.
Designing and building a dream home is one of the biggest accomplishments one could possibly have. It provides a haven for you and your loved ones, and it can be easily liquidated in times of financial crisis. Although it is costly, building a home is worth every penny spent. Additionally, adequate planning before the onset of the project makes a huge difference when it comes to cost. It’s important for you to pay attention to the site that you are building your house on, and to know what you want right from the beginning. You also need to calculate all the costs that will be incurred in the process, so you can ensure you have enough money beforehand and if not, how you can source it. More importantly, you need to ensure that the team you hire is made up of reputable architects and contractors. Consider looking for reliable referrals by talking to previous clients, and visiting homes that they previously built.