As a financial advisor, I’ve worked with many clients as they plan for their dream home and gleaned insights on the process along the way. Building a home can be an exciting, but challenging time. It takes a plan with realistic timelines, budgets and expectations to stay on track and keep your sanity through what can feel like an overwhelming process. If building a home is on your bucket list, here are some considerations before you start.

Set a budget. Have a clear idea of what you want to spend on your dream home beforeCAstle you pick your lot or select your builder. Set an upper and lower limit to work within. With a dollar amount in mind, you have guardrails for spending. You will be able to enjoy the process more when you know you’re not going to overextend yourself.

Explore financing options early. Builders prefer to work with pre-qualified borrowers. When you make the effort to pre-qualify, you show the builder you are serious about your project. New home construction loans are different than conventional home mortgages. These loans tend to be harder to obtain because they require borrowers to have a low debt-to-income ratio. Some provide funds during the construction phase and then convert to a permanent mortgage once the home is built. Some end when the building phase is done, which may require you to take out a conventional loan to repay the full amount.

Crystalize your priorities. When you build, you determine nearly every aspect of the final product. You choose the lot, the builder, the plans and the materials. Save time by identifying your wish list of must-have features before you talk to a builder. You’ll be prepared to negotiate for what you really want and be more comfortable if things that are lower on your list don’t make the cut. With your wish list in one hand and a budget in the other, you’re ready to find a builder.

Your builder should be a good match. Interview builders and ask for referrals to find the best fit. Price is important, but so are attributes such as work ethic, quality, compatibility, and schedule. It’s always good to have choices. You might have your heart set on a builder, only to find out they are not available.

Plan for contingencies. It’s common for construction projects to hit snags and veer off schedule. What’s your plan if your current home sells before your new home is ready for you? Can you tolerate a delay if your current home takes longer than expected to sell? 

Building a home is a big commitment. A lack of dedication or shortage of cash can quickly derail your project. Make sure you’re prepared to devote the needed time and resources to build your dream home. Do you have the flexibility in your schedule to meet with the builder on a regular basis? Can you be involved as much as you’d like? Are you prepared to take on an expense of this size? The answers to these questions will reveal if you’re ready to move forward.

Allow your dreams to benefit from financial planning. Building a home is probably one of the largest single investments you’ll make during your lifetime. A financial advisor can help you plan for this day and work toward other important financial goals in your life. 


Andrew R. Petty, CRPC®, APMA®, is a Private Wealth Advisor with Marlowe, Petty & Associates, a private wealth advisory practice of Ameriprise Financial Services, Inc .  He offers fee-based financial planning and asset management strategies and has been in practice for 16 years. To contact him, please call 407-249-4006, visit his website at or stopover at his office at 10917 Dylan Loren Circle, Suite A, Orlando, FL 32825.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

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