Everybody needs a place to live. If you’re ready to take that next step and become a homeowner, there are probably a lot of different thoughts running through your mind. This is a big step to take for your life and your finances, especially if you’re building a house from scratch. Searching for real estate is one thing, but when you’re building your own home, there are even more steps that go into that process.
It’s easy for your budget to get out of hand as you begin the building process. It’s also very important that you keep things in check and maintain your finances during this time. There are a few different signs that you’re ready to take this next step financially. You deserve to move into your dream home and not worry about the balance as you do so. It’s a good idea to plan ahead and set yourself up for success as you begin building your custom home. Here are a few different ways to get ready financially as you plan a home build.
1. Consolidate your debts, especially credit card debt.
Taking on new debt like a mortgage can put a strain on your finances. For this reason, it’s a good idea to try to eliminate as much debt as possible before you start this process. This will help lessen the stress of taking out too many loans at once. Credit card debt is especially difficult to get rid of. If you’re based in Canada, for example, research a credit card balance transfer in Canada to help with this burden.
This involves opening a new card with a low-interest rate. You can then do a balance transfer from another credit card to the new, low-interest card. Plan to pay that off as quickly as possible, so you can officially be debt-free. This way, you are only paying off your capital instead of spending hundreds on pesky interest charges.
2. Do your research and consult trustworthy builders.
Making any big decision requires research. Before you invest in a custom home, you need to research builders or a general contractor that fits your needs for the right price. Be smart about your finances while still investing in a custom home building that will leave you with a great product. Finding a company you can trust is one of the smartest ways to get the most for your money.
3. Improve your credit score to get approved for a mortgage.
Before you can begin your home build, you need to get approved for a mortgage. Most people can’t afford to build a home with cash upfront. You’ll take out a mortgage and pay that back over time. To get a good deal, you’ll need a high credit score. Work to pay off debts and always pay bills on time to get that credit score up. The higher your score, the better interest rate you’ll get on your mortgage.
4. Be practical about your housing needs.
Building your dream house can be a fun endeavor. It’s also easy to get carried away with your floor plan or all the bells and whistles you want to add. Be practical about what you need and don’t go overboard with your spending. When you prioritize, your funds will stretch more than they would if you indulge in reckless spending.
5. Don’t wipe out all your savings.
Sure, building a home is a huge investment, but you shouldn’t spend every penny on this endeavor. Make sure you still have a decent amount in your savings account for a rainy day. This can help if you go over budget or end up needing funds in another area of your life. Emptying your savings to build a home is a dangerous choice to make.
