How To Budget For Your New Custom Home

You want to build your dream home! How exciting! Here are some tips that will help you get the new custom home you want, and prevent the debt from getting you.

Identify Priorities for Your New Custom Home

This step is the most important because designing and building a home is a journey. Bumps and distractions will arise along the way. A clear image of what you want will keep you grounded. Naturally, you will want to consider location and school district. Also, think about size, the number of rooms and floors, layout, yard size, energy efficiency, and amenities. Make a list and decide which features you must have and which you can live without. Realtor Mag provides a more in-depth list of items.

See the Inspiration Gallery for ideas

If you’re taking this journey with your spouse, discuss priorities early. It is far easier and less expensive to work out differences of opinion now. Once you set foundations you may struggle to make changes. Talk and look for ways to satisfy each other’s list. Watch for win-win solutions. Knowing clearly where you want to go is the first step.

Budget for Your New Custom Home

There it is. It was in the title, so you knew it was coming–that dreaded ‘B’ word, budget.

Your dream of a comfortable life in the new custom home of your choice can become a reality. By making a plan now, you will make your life in this new house is a happy one, with less stress. Dreaming too big could put you in a beautiful house that you can’t enjoy because every minor unplanned expense causes a crisis.

A house is typically a safe investment. We’ve seen some unusual things happen over the last decade, but when we zoom out to 40+ years, values should trend upward in most areas.

But you’re not buying a new custom home to resell for a profit; at least not in the next few years. You plan to build a life there. So when you set a budget, consider what portion of your future paychecks, over the next 15-30 years, will go into this residence.

The conservative rule is to make sure that your future mortgage payment is no more than 25 percent of your after-tax income. Keep in mind that if you earn two incomes now, one of you could lose your job or choose stay-at-home parenting. On the other hand, either of you may earn promotions and raises. So project those numbers carefully. You know the mortgage payment isn’t going to change, so make sure you set it at an amount you can handle.

If you’re comfortable with a little more risk, you might get into the 30%-range of your take-home pay. If you commit more than 40%, you are much more likely to cause stress to your lifestyle. A change like a job loss or the birth of a child could leave you with little margin for vacations, cars, and retirement savings. You also won’t feel as free to take small risks like starting a business or changing careers.

Enjoy the Process

Whew! The budget talk can be stressful. If you do it right, you should have a sense of peace. With calm confidence, you can select your colors, trim styles, and fixtures with certainty. Focus not on what you can’t have, but on maintaining a safe margin to ensure that you can have what is important to you.

Once you make up your mind and set your numbers you can get moving! It is exciting to build in a new development, especially when the neighborhood is nearly complete.

For instance, there are wooded lots available in Aberlin Springs. So check it out and see if this spectacular location could be the future site of your new home.

If you’re ready, now is a great time to get in. Watch your family and the trees grow over the years. You’ll look back from a position of stability, glad you chose wisely. You may even find that list of priorities that you tucked away in a box of memories. Your future self will thank you for good decisions that you make today!