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Your New Home: How Much Will It Cost?

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Sometimes owning a new home instead of renting or living in an older home means adjusting our expectations to our incomes and dealing with hard financial facts even as we dream of the fantasy houses we see in glossy magazines. Many factors affect the cost of a new home, including financing, construction, and local regulations. But there are things you can do to help keep the price within your budget.

The down payment and monthly mortgage payments can often be the biggest hurdle new home buyers face, so shopping around for the right mortgage options can be an important way to save money. For instance, VA or FHA loans sometimes require no or low down payment. There are state assistance programs available for first-time home buyers. Sometimes, first-time buyers turn to parents or relatives for help with down payments. Also, adjustable rate mortgages can help keep monthly payments within your comfort range.

One way to keep the actual cost of a new home within your budget is to do some of the finishing work yourself. While structural construction is best left to professionals, some homeowners do their own painting and woodwork finishing. These jobs certainly are not easy but may be a way to create substantial savings. There is also a wide range of price levels for some materials, such as cabinets, carpeting, appliances, and bathroom fixtures. What people choose to put in their homes is as unique as each individual. The important thing is to weigh your options so your new home is comfortable, affordable, and meets your needs.

Another cost-saving tactic is designing a home so that rooms, such as additional bedrooms, can be added in the future. Some homeowners wait to finish their basement a few years after they move in, when it is financially easier to complete the work.

There are added costs for regulations that most homeowners never consider. Development fees and other construction charges can add more than $12,000 to the cost of a typical home. These fees include inspections and permits, re-zoning applications, wetland permits, access permits, grading, fire-retardant walls, setback requirements, and more. The costs vary from city to city, so the location of a new house may affect its cost.

With all these factors, the most important consideration is the quality of your home. It must be a sound structure that will provide years of worry-free living for you and subsequent owners. Finding a professional builder with whom you are comfortable is a basic requirement in building your dream house. Visit neighborhoods in which you want to live or where there are comparable houses. Talk to owners about their builders to see what their experience was. Professional builders are happy to supply references to prospective homeowners.

Every home buyer chooses the aspects of a new home that are most important to them. Having a home on a lake may be the dream of a boater. A traditional home with plenty of bedrooms and baths on a cul-de-sac in the suburbs: someone else's dream. The excitement of easy access to the theater in the heart of a city may thrill another. Whatever your dream, thoughtful analysis of what is most important to your lifestyle and your budget will help ensure that the experience of buying or building your new home will be one of the most pleasant times of your life. ■

Keith Grant is president of the Memphis Area Home Builders Association.

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