Building a home can be fun, but it can also be costly. While you can anticipate the costs of things like refurbished countertops or custom parts, you may incur some other costs that you don’t always think about in advance.
This is what they are.
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1. Permit fees
There are many permits for the construction of a new house. Your builder will usually apply for building permits for the property and any permits required for things like wells or septic systems. But the cost of these permits will be passed on to you. In many cases, this can be thousands of dollars.
And if you have a unique situation, such as needing a permit to impact a protected wetland or other body of water, then obtaining the required building permit can be very time consuming and cost thousands of dollars.
2. Costs to close
Although many people know about closing costs when they buy an existing home, you will also have to bear these costs for new construction. In fact, if you don’t get permanent mortgageyou may have to pay for closing twice (once when you get a construction loan and once when you refinance your mortgage after your home is built).
Closing costs can also be up to several thousand dollars, especially if your developer charges you a commission equal to a percentage of the value of your home at the end of your transaction, which some do. This will be in excess of any fees that you mortgage lender and the local council fee for securing your loan and transferring ownership of the property.
3. Fees for architects and engineers.
If you cannot find a finished floor plan that is perfect for your site, you may have to pay an architect or drafter to design or modify the plans and make sure they comply with local code requirements.
You may also need to pay an engineer for things like creating a drainage plan or leveling a road – depending on the site, area, and local requirements.
Sometimes your builder will take these costs for you and include them in the value of the property. But in other cases, you will have to pay them separately and independently manage the process of hiring an architect or engineer. Either way, you will ultimately be responsible for the cost of these services.
4. Configuring utilities
Finally, you will need to connect your new home to water, sewer, electricity, internet, and cable. And in many cases, you will have to pay a certain fee to set up these initial connections to the utility companies.
While this may not be a huge expense, it can be difficult to cover beyond paying all these unexpected fees during your project. To make sure you’re not prepared for any of these four basic costs, ask your builder ahead of time what you can expect and include those costs in your home buying budget.