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Writer's pictureBrad Young

Tips on Saving for a Custom Home Build



There are two things everyone knows about custom home builds: they take time and money. However, you may be surprised to learn just how much of each they take — it’s often not as much as you may think. We have some tips on how to help you save money to get your project started.


Before the Project


Get Several Bids and Select a Contractor Wisely

You have a choice about who you hire as a contractor. Get bids and pick the one with the right experience and the right price. Make sure you get a contractor who listens to what you want as well. One who listens to what you want, what you need, and sticks to your budget.


You’ll get a few bids from a few different companies, so do your research, interview each one, and pick the best option for your home and your budget.


Most of all, don’t go with your friends or the first person you talk to. Always seek out multiple bids to ensure you’re getting the best possible deal.


Once you’ve gotten a few bids you’re happy with, seek out references. Ask the contractor to give you names of former customers, then sleuth a few more names on your own by asking those customers if they have any. Contractors are going to give you their best possible references, so it’s a good idea to seek out more folks in order to get a well-rounded picture of the person you’re going to work with.


It’s not just the price of the home that costs you money. If contractors drag their feet or fail to effectively manage subcontractors, you may end up paying additional money to correct mistakes or to live in your current home longer while construction drags on. The goal is to find a respected and affordable contractor whose work can be trusted and who sticks to the promised timeline.


Find a Good Banker

Your banker is the instrumental piece that can save you tons of money in the beginning as well as a lot of money in interest over the lifetime of your mortgage. A good lending institution will give you rates on a mortgage and loan that will make you drool. For example, you may be able to find a 30-year mortgage with interest rates around 4.5%, which is fantastic for today’s market.


You’ll have a limited time to lock into these rates, so don’t delay if you find one you really like. lAlways look for the best deal, but remember that you can re-lock your rate at a different lender or refinance your mortgage after some time has passed.

Negotiate the Construction Loan

When it comes to taking out a loan for construction, you’ll still have to pay something upfront. Most builders do want a downpayment for their project. You can pay this in cash as well. But it all comes down to how you negotiate your construction loan.


Try your best to find a local banker or lender who makes construction loans and understands the business of residential home construction. At the very least, you should look for one that is flexible and open to learning about the industry.


Knowledge is power, so it’s beneficial to learn about local terms and conditions in the banking community. Know the loan-to-value ratios of your request, as well as the ranges acceptable to your bank.


When the Project is Starting

There are a few ways to save money during the construction phase as well.


Source Materials When Possible

Talk to your contractor about sourcing your own materials. In some cases, the contractor and subcontractors can get better prices on bulk items, such as lumber and paint. However, in other cases it makes sense to do your own digging and buy less expensive – but still high-quality – items on your own. For example, your contractor may be able to find your water heater for $850, but you might be able to do some shopping on your own and find a cheaper model.


Generally speaking, we suggest you source new materials rather than pre-owned, but that depends on what you’re looking at. For instance, go ahead and buy a new water heater or air conditioner from a retailer such as Amazon, but consider shopping at online resellers like Ebay or Facebook for second-hand flooring, cabinetry, or light fixtures.


Know When to Splurge

There are times when spending a little more money will actually save you money in the long run. One of those instances is insulation. Depending on the material of your home, batting insulation may not be as efficient as spray foam insulation. Additionally, batting insulation also becomes a home for pests if they can get into your walls, which can cause a lot more problems for you down the road.


When this type of change order is presented to you, consider the pros, cons, and long-term benefits of increasing your budget. In some cases, opting for foam insulation may help you save on energy bills and prevent us from dealing with unpleasant experiences, such as rodents or excessively loud thunderstorms.


Finally, splurge on a contractor you can trust. We spoke earlier about choosing the right one for your job and budget, and that is still the case. However, you shouldn’t pick the cheapest option because you think it will save you money. Pick the right option: someone with experience, someone who listens, and someone who actually cares about your project more than the money they’ll be making from it. A good place to start would be with us. So give us a call and we’ll make sure all of your custom home build needs are taken care of.

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