New home construction is typically one of the largest investments most people will make in their lifetime. One question that we’re asked time and time again is “How much does it cost to build a new house?”
During our previous processes, we’ve determined the major details of the home, including the number of rooms and size of the house, the architectural design, amenities, the septic system, and the orientation of the home on the lot. Each step will have an impact on how your home will be designed and built, and the final cost to construct from start to finish.
Once the final on-site layout is complete and approved by all parties, Total Quality Home Builders will provide a good faith estimate for review and approval.
New Home Construction Loan Versus the Traditional Mortgage
A construction loan differs from a traditional home loan. With a traditional home loan, the borrower makes a down payment, takes possession of the property, and makes a monthly mortgage payment to the lender. With a construction loan, the borrower is asking the lender to estimate the value of a property that does not yet exist and then lends you money to create it. The risk to the bank is much greater, so there is caution when lending funds for new home construction.
Final Costs of Your New Home
The final cost for new home construction will depend on where you are building and the readiness of your lot, among other things, but it also depends on “premiums” – the differences in finishing both the exterior and interior of the home. There is a base price per square foot that includes basic exterior and interior elements, but that price will increase should you prefer top-of-the-line, or “premium” elements.
Good Faith Estimate
As we go through the process of planning your new home construction, we will document estimates of each cost, including the formulas used, so you can clearly see how elements are budgeted. You then have a better idea of what premiums you can add in, and how much each premium will add to the cost of the home.
Once we have all the details, we’ll establish a budget and create a Good Faith Estimate for your approval. Our process is 100% transparent and our goal is to minimize surprises during the construction process.
Next up in Part 12: Homeowners Association Application, we’ll discuss the process of applying with your community Homeowners Association and the rules and regulations for new home construction.
