Everybody dreams of owning a perfect house for themselves and their family, but not many people choose to create their new home from the ground up, mostly because of misconceptions.
According to the Census Bureau, the home ownership rate in the first quarter of 2021 is approximately 65.6%.
The majority of people think that building a house is more expensive, but that’s only because you have to pay more upfront in comparison to monthly mortgage bills.
However, there are various ways to save money when building a house that you can utilize to make your dream investment come true.
We’re here to help you find out about some of the ways of saving money when building a house. In this article, we’ll explain:
- Various approaches to saving money when building a house.
- How you can own your finances with Whole Life insurance and the concept of Infinite Banking.
We hope that this article will support you in your journey of building a dream home for yourself and your family without many stressful financial obligations.
As with any significant financial decision, setting a budget and sticking to it is a crucial step in homebuilding.
Setting a budget is something we suggest doing with a financial advisor or anyone specialized in this area, as they’re more likely to know about all the possible hidden costs. You should set a budget before even purchasing a lot.
Remember that your budget doesn’t represent how much you want to spend but how much you can spend. Abiding by the budget is crucial no matter how tempted you are. Going a little over the budget for many small things can turn into a significant overstep in no time.
Also, ensure that the base price gives you a lot of wiggle room in the budget. A base price often entails elements like the lot, basic structure and finishes and landscaping, but you can also opt to do landscaping or lot purchasing by yourself.
You can also request a firm fixed price (FFP) from your contractor that fits your budget. This is an all-inclusive price, but not many contractors give you this option.
Of course, you won’t pay the full price of construction until your own home is completely finished, but you shouldn’t wait to explore lending options.
When building a house, your contractor will ask for a down payment before the building even starts, and the rest of the costs will be paid gradually with closing cost incentives at the end.
However, you should contact a lender before your house is finished to ensure your loan is approved and there won’t be any problems.
Whether it’s a loan from a bank or an independent service, make sure you choose your lender carefully and investigate all of the possible options and what their offer entails before settling.
Most future homeowners consider lot purchasing to be the most straightforward aspect of home building, but that’s not always the case.
Of course, this price also depends on the type of surroundings you want to live in. Do you want to establish a house in a small lot in an urban area, or do you prefer more rural or suburban regions?
According to the rule, lots in rural areas are more affordable, but you should also take time to ensure you’re making the right choice.
The cheapest lots are predominantly the ones that need the most additional work done. There’s no point in paying a couple of thousand dollars less for a lot if it doesn’t have access to public services and utilities. Other additional costs that could pop up are problems with the soil, such as too many rocks, trees or underground water.
Ultimately customized house plans can become a significant expense when opting to build your own house. They take time and effort to make, so you’ll have to hire a professional to create them, which can be costly.
Although this can seem like a complex task, it’s still more affordable than purchasing a new house. According to data, real estate prices in the U.S.have risen by 73% since 2000, making it difficult for young homebuyers.
Instead of hiring an architect to create a custom home for you, you can purchase a premade house plan. These are available through many companies that sell custom blueprints.
The only action you have to take is to choose the plan that fits your budget and your idea perfectly.
If you know how to read a floor plan and visualize the results, you’re good to go. But, if you need help figuring out the project or making some customizations, you can always hire a professional to do so. The customization process will take less time, so that the fees will be lower.
Some companies that sell premade blueprints are also ready to make customizations for a fee.
Undoubtedly, the smaller the footprint of the house, the less the entire building will cost.
If you want to save money on home design, we suggest eliminating any additional space that isn’t entirely necessary, considering you’ll be paying for it by the square foot.
Instead of focusing on additional things you may need, start from the essential requirements and make sure you think about any extra spaces you might want before adding them to the plan. Additionally, make sure there aren’t any phantom spaces you won’t be using.
On the other hand, smaller spaces can feel very cramped, especially in a family home. Opt for an open floor plan in the living area to minimize the feeling of a small space. You can do this by combining the kitchen, dining area and living room. This reduces cost because fewer walls are built.
A smaller house is also simpler to build and maintain, making it another advantage.
This is probably one of the pieces of advice on this list for which you’ll have to be more knowledgeable than most, as it isn’t something anyone can do.
In most states, you can become your own general contractor for a personal residence without any license required. However, the job of a general contractor is complex and time-consuming.
If you’re ready to do everything from tracking expenses, purchasing materials, following the building process and hiring and communicating with builders and subcontractors, you can be your own general contractor.
This job isn’t as simple as it may seem, but it can save you up to 10% of the total building cost, which can turn out to be a lot. However, that doesn’t mean it’s worth it.
General contractors may also have to obtain all relevant building permits and a builder’s risk of fire policy, depending on the state they live in and their subcontractor’s offer.
Hiring proper builders is one of the crucial aspects of building a house well while following the predetermined timeline accordingly.
Whether you have to choose a contractor with their own builders or you opt to be your own general contractor and hire builders yourself, this is a significant task.
Our main advice is to compare various builders in your area, let them place a bid based on your idea and choose the one that fits your budget and vision best.
Never opt for the cheapest option or the one you find first. Before settling, gather references from the most likely choice to verify the builder’s quality with previous customers.
You need someone who’ll do quality work, stick to the timeline, communicate appropriately with you and the builders, have a reasonable offer, and know your priorities.
Sometimes, purchasing building materials yourself instead of letting the subcontractor do it is a more affordable option, although not always.
Subcontractors will have better prices for items they have to buy in bulk for the construction process, such as lumber and paint.
However, there are some instances where you’ll pay less if you buy the items yourself. This can apply to elements like wiring, siding, various light fixtures, installations and other things.
It could also apply to the items that subcontractors could buy in bulk because you could get a discount from suppliers for paying upfront. Subcontractors also may lower the bid if you purchase the materials yourself.
When purchasing materials yourself, you can also source materials or use recycled items. Pre-owned elements can be found for cheap, although some things should always be bought new and unused, such as water heaters, for example.
Always do your research before settling for a purchase.
Energy-efficient homes are the future of both building and living. They may seem like a significant expenditure when you’re trying to save on building costs, but they are unquestionably more efficient in the long run.
Choosing the suitable materials, insulation and appliances based on the climate you’ll live in will make your homeownership much simpler.
Investing in elements like solar panels now can become a considerable funnel for saving a lot of money on bills in the future. These can be found in many stores and are easy to install.
According to statistics, enough solar panels have been installed in the U.S. to power 16.4 million homes.
Experimenting with renewable energy is valuable for both you and the environment.
It’s essential to think about the future when choosing various elements for your house.
Even though you may want to save money when building a house, you should know when you can splurge on appliances and elements and when you can go for the cheapest option.
Before you start shopping, verify what you need and what you can reduce costs on. You can cut costs on elements like high-quality faux wood floors instead of hardwood floors, appliances, lighting, etc. You can look for furniture in stores like Habitat for Humanity or Goodwill.
Before opting for anything, make sure you have a couple of options at hand to ensure you’re choosing the best one. Don’t be afraid to shop pre-owned or recycled items for things you know don’t need to be perfect.
You can always go with standard solutions now and work on home improvement and remodeling later. However, some things you’ll have to splurge on from the beginning, such as adequate insulation, installations and energy-efficient appliances.
Make sure you’re still choosing items of the highest quality in comparison to the price.
Insist on creating a home with standard sizes for everything because your expenses will be significantly reduced.
Regardless of the house’s footprint, some things should be standard sizes, such as doors, windows and furniture. If you purchase a premade blueprint, ensure that all the doors and windows are standard-sized, as they’ll be more affordable to purchase and more straightforward to install.
Furniture should also be standard sized, especially for kitchen and bathroom elements. This is because custom elements will cost you more time and money to create and assemble. Instead, you can purchase all components ready to assemble (RTA) from wholesalers when opting for standard-sized cabinetry and countertops.
Wholesale furniture is more affordable and you can assemble it by yourself, thus reducing the total cost significantly.
Our last piece of advice for you is to do anything yourself to reduce the cost with your contractor or subcontractor.
Unquestionably, some things have to get done by the professionals. These elements include tasks like home construction, installing drywall, wiring or anything else you must be a licensed professional to do.
If you’re working with a contractor, you likely won’t be able to do any building work, but you should openly communicate with them about your ideas and the actions you can take. Although, most of them won’t let you do any serious work by yourself for insurance and quality reasons.
However, most of the tasks by the end of construction you can do by yourself. This includes painting, assembling cabinetry and furniture, landscaping or any DIY projects you can make.
To put it simply, final touches can be done entirely by yourself and anyone willing to help. Although you should know that these things will take time, so don’t expect to be finished immediately. You can even postpone some parts of the project to a later date.
Building a home for you and your family is a stressful and time-consuming task, but it’s also financially taxing regardless of how much you try to save money on building costs.
The end goal of owning a home seems more attainable when you look at all the ways you can save, but it’s still a hefty sum. What if we told you that there’s a way you can gain enough financial independence to build a home for yourself without stressing about funds?
We’re here to teach you about the concept of Infinite Banking.
This concept can be used to help you secure your financial future and bring you additional benefits. If you want to try Infinite Banking, you first need to own a Whole Life insurance policy. Here are some of the crucial aspects of this concept you should know about.
Infinite Banking is a strategic method for utilizing your Whole Life insurance policy to create an endless banking system. To put it in other words, Infinite Banking means being your own banker.
Owning an overfunded Whole Life insurance policy has many benefits, one of them being that you can borrow money from it using your policy’s cash value and repay it later. This way, you borrow money from yourself instead of a bank, and you pay it back to yourself with the rate of return, thus becoming your own bank.
The most significant advantage of the Infinite Banking method is that you can gain control of your finances without paying any fees to the bank.
Infinite Banking entails:
- Overfunding a high cash value whole life insurance policy from a life insurance company with after-tax money.
- Accumulation of Cash Value (tax-free) as long as you are a policyholder of your Whole Life insurance policy.
- Tax-Free Loans taken out against your whole life insurance policy’s cash value to use for your financial expenses.
All of these aspects culminate in creating your own bank. You borrow from yourself while your Whole Life insurance policy still earns dividends even though you’re using those funds elsewhere.
No matter what your financial objectives are, Infinite Banking can help you reach them. Entering the Banking Business gives you better control over your finances and helps you build wealth using the life insurance policy.
The most significant aspects of saving money when building a house boil down to setting a budget, following through on it and doing whatever you can do by yourself.
We hope that this article helped you learn everything you should know about saving money when building a home. Also, it hopefully made you interested in the method of Infinite Banking with Whole Life insurance.
If you want to learn more about Whole Life Insurance and improve your personal finances, you can sign up for our premium membership! We are looking forward to seeing you at the Wealth Nation community!