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Navigating the Path to Building Your Own Home

Financial Preparedness and Builder Selection 

Setting out to build your dream home is a thrilling adventure, but it requires meticulous planning and financial readiness. Finding a reputable builder, understanding the contract’s terms, having money set aside for unforeseen expenses, and securing financing are all vital steps in the process. Reviewing each step thoroughly can help ensure a smoother road throughout the construction of your new home. 

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This article will guide you through the process of evaluating builders and understanding the financial aspects involved in your home-building journey. 

Researching and Vetting Builders 

Upon deciding on a new construction for your new home, one of the first steps to take will be to choose a builder. I recommend meeting with multiple builders, but sometimes that may not be possible. Be sure to ask each builder you speak with about their experience, construction philosophy, and communication style. Review previous projects and be thorough and direct with your inquiries; what is important to you is important for them to know. 

Continue your research by seeking recommendations from friends, family, and real estate professionals. Nothing speaks louder than personal experience. Also, ensure the builder is licensed, bonded, and insured by using resources like the state Labor & Industries webpage. Seeing your builder and their qualifications listed on the Labor & Industries listing should instill confidence that you are partnering with a highly qualified professional. 

Reviewing Contracts and Cost Structures 

Once you have selected a builder, your focus should shift to negotiating the costs associated with the build. Negotiating and reviewing the contract with your builder should give you insights into the overall cost of building your home and the timeline for completion.  

It’s critical to understand what the terms “fixed price” or “cost plus” mean before signing a contract. Occasionally you will see these terms tossed around, but also be sure to read the fine print because a “fixed price” contract with a disclaimer that “all pricing is an estimate” could result in a much larger total invoice. 

Understand the scope of work, timelines, and payment schedules. Be sure to ask when you will need to make payments, how to make those payments, and who is responsible for any cost overruns. 

Spend time reviewing the contract to ensure you do not get surprised mid-build. Always seek clarification on any unclear terms. You are building your home and confidence through the process is paramount. A patient builder is receptive to questions and should confidently guide you through each phase. 

Compare quotes from different builders. Often, you get what you pay for. Look for transparency in pricing and a breakdown of costs. Remember that you have the ability to negotiate terms and conditions, but the builder also has the ability to say “no”. 

Financial Preparedness 

Besides having established solid credit and maintaining a strong income historically, there are other financial items to be aware of. 

The make-up of a home build is not just wood and nails. The expenses begin before a shovel even hits the ground. From the floor plan drawings to the final landscaping shrub, there will inevitably be unexpected expenses in every build. 

Most homeowners will confirm that saving cash prior to your build will be key. If you’re financing, your financial institution requires a sizeable down payment to the table, likely 15-20%. If you are planning on using all your cash for the build, you’re risking the all-too-common occurrence of cost overruns. Given this, it’s advisable to set aside a portion—about 5%-10% of the contract price—as a safety net to navigate unforeseen expenses during the project.  

Confirm Your Long-Term Financing Plan 

Unless you have the cash to self-fund the construction of your new home, you’ll want to be secured in your long-term financing plan. Financing can happen at multiple points during the process. There are questions that will come up closer to the project’s completion. Once your home is completed, will you be seeking a lender to secure a mortgage? Have you arranged for your construction loan to transition into a mortgage? Will any further upfront costs, such as appraisals or closing costs, be required to secure the next phase of financing? 

Prior to ever signing a contract with a builder/realtor, you’ll want to be confident that your new home fits into your financial situation. 

As the financing landscape evolves, having a knowledgeable lender by your side is crucial for aspiring homeowners. They can assess your financial situation and advise on a feasible project scope, ensuring you don’t end up scrimping on essentials.  

Let’s discuss more 

Embarking on the journey of building your own home is a monumental task that demands both financial readiness and meticulous builder selection. By conducting thorough research on builders, scrutinizing contracts, and preemptively planning for potential expenses, you can approach the home-building process with confidence and peace of mind.  

Looking to explore custom home financing options?  

At Community First Bank, we’re committed to supporting you every step of the way on your journey to custom homeownership. Our tailored financial solutions are designed to help you turn your dream into a reality. 

Rick Pullen, NMLS# 730843, Construction & Consumer Banker


This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.