The journey of two millennials

Welcome to Fun Home Building, a blog on design, construction and building a dream house on a budget. We are documenting our journey of building a custom home in the suburb of twin cities, Minnesota and will share what we learn along the way.

  • House on West Shore

Our new construction home is finished! Sneak peek of the inside and the true cost of custom build

We finally closed on our new home last week. The bank needed 3 business days after closing for the fund to be mature. After some more waiting we now officially own this beautiful house and can start moving in!

Even though the finished square footage of the new house is only 700 sqft more than where we currently live, it is so much more spacious and open. The high ceilings, big windows and white trims all make a big difference. We will be spending the next few weeks furnishing the house, putting up decorations to make it feel cozy, but here is how it looks now.

Our white kitchen with black countertop on the perimeter, island countertop is quartz

Empty living room, we chose to use wood floor throughout the main living area on first level

Living room during construction, we are thinking of buying a miter saw so we can tackle these trim works ourselves in the future

Unfinished basement, this large space can be used as a sport court for now

From walk in closet looking into laundry room and master bath

Gallery style master bath, this picture was taken before the countertop and mirror were put up

Orbit chandelier by stairway, we love the shadows cast by the light

Light wood front door, the door trims still need touch-ups in the spring when it is warmer

DH and I are both very pleased with the end result, but I have to say the house comes with a high price tag. We were able to come under the original contract price at the end of the project, which rarely happens according to our builder and mortgage broker. But we have learned some important financial lessons about custom build along the way that we didn't know going into the project. As a consumer who always try to make informed decisions about money, I thought I would share these with you.

There are 3 main components of cost when building: initial investment, financing cost and out of pocket contingency funds. When buying an existing home or building with a tract home builder, the buyers usually put down an earnest money or deposit at the beginning, then finance the total price (less deposit) of the home into a long-term mortgage. There is only one transaction in the equation, pretty straightforward and simple. But when building a custom home, there are a lot of moving parts.

First of all is the cost of land. Then it comes the actual design and building process, all the materials, labor and supervision. There is also financing cost for getting and holding a construction loan, as well as getting a final mortgage. Finally there are additional expenses not included in the price of the house.

Here are some numbers for a general, mid-level home:

In Gardenweb of Houzz.com the general guideline is to have at least 15% contingency fund for unforeseeable expenses. As the project gets delayed for extended periods of time, the cost of holding a construction loan and short-term rental also increases, that can be really stressful if dealing with a large amount of loan. Having an easy-to-access fund and preparation going into the project, as you can see, are critical.

Wall Street Journal - Five Things I Wish I Had Known Before I Built My House

Houzz.com: Cost to Build a House


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