Everyone knows that building a house is an expensive task. The amount of payments to be made is not limited solely to the cost of purchasing the property and construction. There are always plenty of other expenses to take care of. Paying the workers, paying the architect, getting all the permits and paying the agent, who has been hired to get the property, will all factor into the amount of money required to build a house. So while most people have opted for a construction-linked plan to get finance from the bank, it’s always beneficial to have some cash on hand, in case of unforeseen circumstances.
Many people think that since they have opted for a bank loan, money will not be a problem. However, they must remember that many protocols and procedures must be completed before the money reaches their hands. As a result, the construction of your house could stop due to lack of money. Since construction interruption can result in additional expenses due to rising prices, most people like to get the job done as soon as possible. Therefore, to ensure that this does not happen, it is always advisable to keep thirty percent of the budget in cash, just for the sake of emergency. Although it sounds like a large amount, this money will be used for a variety of purposes, some of which are mentioned here:
* When buying a home, the down payment must be made before the loan is approved. So with that in mind, the cash should be ready. Costs to close the deal will also have to be paid.
* Once you get a loan, you will have to pay your mortgage payments and taxes. Therefore, having a steady source of income will allow you to do so. The good news is that most banks will give you a payment that will be affordable in relation to the amount you earn each month.
* All payments for the architect, inspectors and realtors are made before the loan amount is paid. These costs can combine to form a large amount that will require a substantial amount of cash on your part.
* It is not possible to calculate exactly the amount of money needed to build a house. Most of the time, you will exceed the budget you have set. Taking care of these costs will require extra money on your part.
* When you start building a house, you have an idea in your mind of how the house should look like. Although many times, during the course of construction, you may decide to change some features or make some improvements to the house, which may cost you more.
Looking at this list, you can clearly imagine that the home building process is expensive and time consuming. Never spread your finances too far apart, as this can leave you in a precarious position. Instead, always organize a surplus of cash, which you can draw on in times of emergency.