Building a custom home can be fun, but it’s also time-consuming and expensive.

Before you start this project, make sure you are ready to commit the time and money that will be required of you.

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A home is the biggest asset most people will ever purchase.

With bigger assets come bigger risks.

Lenders are often conservative when it comes to financing a custom home, and potential buyers should prepare for added scrutiny in securing this type of loan.

The first step before you even start looking at house plans or scouring open houses is consulting with an independent financial professional that can help you understand the types of loans available, what kind of credit score lenders require, and how much money you need in order to qualify for your dream home.

Tip # 1 – Save for a down payment

People generally spend between $15,000 and $30,000 on their dream home.

Because of this added expense, you should set up an emergency fund that will cover emergencies like job loss or illness.

You’ll also need to save at least 1-3% of the cost of the home (eg. If your house costs $350,000 you’ll need to have saved at least $3,500 – $10,500).

Tip # 2 – Get prequalified for a mortgage

Getting pre-qualified is like getting approved before you even go shopping.

This way buyers know exactly how much they can afford up front instead of wasting time looking at houses out of their budget.

There are strict qualification guidelines when it comes to securing a home loan, and buyers should consult with the experts at their financial institution to ensure they are accepted for financing.

Tip # 3 – Look past your needs

Most people look for houses that fit their specific needs, but if you focus on what you truly want, it will save time in the long run.

Make a list of your top five must-haves.

One way to make your dream home more affordable is by asking yourself how flexible you can be with these needs.

For instance, if having an extra bedroom is number one on your list, are there other bedrooms that are just as large that would work instead?

Tip # 4 – Research builders carefully

Some custom home builders have no problem over-promising and under-delivering.

Do your due diligence before signing any deal with a builder.

Check references from past clients, ask to speak to at least three people, and read online reviews for other homes built by the same company.

Tip # 5 – Don’t overspend on extras

If you love granite countertops but can’t afford them initially, make a list of all the things you would put in your dream home if money were no object.

Then stick to that list as closely as possible when outfitting your new home.

Use this rule of thumb: 1% of the cost should be spent on extras like flooring or landscaping changes after moving into your new place.”

Tip # 6 – Don’t ignore other costs

Other costs to consider when owning your dream home: homeowner’s insurance, HOA fees, and taxes.

Some other initial costs: application and appraisal fees, loan fees, and moving expenses.

Tip # 7 – Know what you’re signing up for

All home purchases include a binding purchase agreement that outlines rules and regulations within the community.

It’s important that buyers read this carefully before agreeing to buy because these could affect future renovations or selling your house.

Before signing any agreements, make sure you understand all of the details outlined in the contract as well as what is ultimately included in your sale.”

Tip # 8 – 5-year rule

Lenders will ask for at least three years of tax returns, but if you plan on paying your house off before five years (the average is seven to 10) then lenders may consider just two full years.

Tip # 9 – Get a pre-inspection

When you’re investing in a home that has been built for someone else, it’s important to get your own inspection well-constructed that has been built for someone else, it’s important to get your own registered property valuer.

Get an inspector who is not affiliated with the builder and make sure they cover everything from foundation to rooftop.

Tip # 10 – Shop around when looking at financing options

There are many lenders on the market today and each one has different requirements.

You can save money by shopping around for a loan that best meets your needs.