In our post-pandemic world, the home building market has become challenging and difficult at times. Builders are incredibly busy, and the cost of building materials has increased significantly. This pricing can impact any loan you have, so it’s important to understand your loan’s impact and what you can build when it comes to a custom home. Here are a few things to remember when pursuing financial solutions for a custom home in 2022.
Design Within Your Budget
When you’ve got your design planned out based on your budget, make sure you lock it in with your builder. You don’t want to make significant changes down the road, as this can greatly impact the overall cost of your custom built home. Evaluate your options, and ensure that you have alternatives for your design in case a specific product isn’t available when it comes time to build.
Working with Marc Julien Homes makes this process significantly easier. We can help you custom design your home, and guide you every step of the way. We will develop a design plan with you, and find ways to fit your preferred home features into your budget.
Don’t Forget Contingencies
When people calculate their mortgage and how much of a loan they need to borrow, they often forget to include contingencies. Many lenders require a 3% to 10% contingency to help you prepare for any unexpected costs.
Marc Julien Homes helps you stay within a certain cost, so as not to have to use any funds from contingencies, but most lenders will still require the contingencies.
Appraisals Affect Loans
If your appraisal is higher than the total project costs, you may end up with a lower down payment. If the appraisal comes in lower, a larger down payment might be required. Let’s say you put a down payment of 20% down on a $1 million home. The loan would be for $800.000. However, if the appraisal ends up coming in at a value of $900,000, you will have to make up the $100,000 difference.
Remember Hidden Costs
The hidden costs that come with creating and building a house may end up adding more to your initial down payment. For example, in some states, materials AND labor have sales tax added on, which can become very costly. This also goes for decisions that will impact the overall price but not the appraisal. If you were to build your home on the most difficult part of the property, a large cost could be added but not be added to the appraisal, which means it isn’t covered by your loan.
Marc Julien Homes can help you throughout the entire home-building process, from designing to constructing. We work closely with buyers to ensure the most valid, correct information for the bank and the appraiser. We can help you with insight regarding our recently completed homes, and help you see what they were appraising for compared to the cost to build. Let us help you design and build your custom home today, and we can help guide you as necessary!