In last weeks article I talked about whether it was actually worth it to build a house and several challenges that came along with doing it as well. So this week I thought I would go in the opposite direction and give you some tips on how to save money building a house that I’ve been able to take advantage of as well and some that I have not.
Also feel free to add any ideas you know of in the comments below. My goal is to make this article a huge resource for those that want to save some big bucks while building their house. So let’s get started.
1# Get Someone To Haul The Dirt For You
One of the first ways I saved some big money when building my house was to have someone else haul the dirt away. When it comes down to contractors and other companies are almost always looking for quality dirt for almost everything from construction sites to leveling out a plot of land.
If I were to have my contractor haul the dirt away for me it would run around $70 an hour and with them hauling out 20 loads of dirt which could get quite costly. In other words it was going to cost me at least $1500 to haul the dirt from my basement away. So I talked to a few people I knew and called a few trucking companies and was able to line up a deal where the trucking company would haul the dirt away for at no cost. Not a bad deal.
Total Savings – $1500
2# Negotiate The Land Price
One thing I never thought about when I was getting started with the building process was negotiating on the price of my lot. It didn’t strike me to do that until my lender had mentioned it to me. It also just so happen that the lot I was looking at had been for sale for about a year which helped me out a little as well.
The lot itself was going for $24,500 which actually wasn’t that bad of a price, so I low balled him an offer of $20,000 and he answered back at $23,000 and we agreed on that. In the end I know my situation might have been a little bit different but it can’t hurt to shot a lower offer especially if the lot has been for sale for a while.
Total Savings – $1500
3# Contractor Incentives
So we’ve made it through the first two tips on saving money to build a new house and I’ve already saved $3000, however this next tips saved me far more than the last two tips combined. If you really want to save some money see what kind of incentive programs contractors are willing to give you.
Depending on your situation contractors can give you a special incentive if you are in the military, or a nurse, or even senior citizen On top of that some contractors will give you special incentives just to get you to sign with them. In fact, our contractor gave a $14,000 discount incentive and I’ll have to admit without that incentive I probably would have not built my house.
Total Savings – $14,000
4# Buy Appliances Way In Advance
Another thing I did was buy all of my appliance way in advance. By doing this you can save a ton, pay them off early, but even more it allows you time to look out for the deals. So I started my search local and talked to several places but a lot of them were not giving anything much of a deal.
Then I went to Sears and I’ll have to admit I didn’t think I’d be able to find any good deals their but I was able to get 10% off on three of my appliances and 15% off on the two most expensive ones. In other words if I would have paid full price for the appliances it would have cost me $4300 or more but with the discounts I’m only paying $3700 for them and that even includes the delivery charge saving my around $600 total.
Total Savings – $600
5# Build In The Summer Versus The Winter
Now one thing I did that could have saved me some extra money was to build in the summer versus the winter. Really I had no choice on the timing of building my house because my old house didn’t get sold until August and my contractor wasn’t going to be able to start digging until Mid November. I guess I could have waited but that would have meant living in a rental house for several months longer, something my wife and I did not want to do.
The problem with building in the winter depending on where you live is that it’s hard to do things like pour concrete, lay brick, put a roof on or even drywall, since all these things require the temperature be a certain degree. In order to do these job they have to temporarily heat me house with propane which can get a bit pricey. In the end I’m looking at a $500 bill just because I built my house in the winter and not in the summer. Ouch!
Could Have Saved – $500
6# Get Referrals
Another unique way to save money is to get someone to refer you. This might sound odd but contractors like it when people refer them more business. In fact my contractor will pay anyone $500 if you refer someone to them and they sign a contract to build a house. However you might be wondering how this saved me any money.
Well it just so happened that my brother wants to build through the same contractor so he refereed me to the contractor and I referred him a few months later and it was actually a win/win for both of us because we ended up getting a $500 rebate each.
Total Savings – $500
#7 Look Around For Good Loan Rates
Finally, the last thing that saved me some big bucks was the mortgage rate. Right now we are in the middle of some of the best mortgage rates around. In fact, just a few short years ago we were only getting around a 6% loan rate but now we are seeing rates around 3% to 4% depending on your credit and debt to income ratio.
However because I have a good credit score, and a low debt to income ratio, I was able to score a really good rate of 3.5%. If I were to have more debt and a not so perfect credit score I could be facing rates around 4% to 4.5%. In other words by having good credit I’m saving $1320 a year or around $39,600 over the life of the loan. Sweet!
Total Savings – $1320 a year
In the end I saved almost $20,000 with all the tips I’ve given in this article. So now that I’ve shared my tips what have you done to save money while building a house? Feel free to share your ideas and thoughts below