4 surprise costs when building a house


Building a house can be fun, but it can also be expensive. While you might expect a cost on things like upgraded countertops or custom details, you can run into other expenses that you don’t always think about ahead of time.

Here is what they are.

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1. Approval Fees

A lot of permits are required to build a new house. Your builder will usually submit permits to build the property and any required permits for things like wells or sewage treatment plants. However, the cost of these permits will be passed on to you. In many cases, that can be thousands of dollars.

And if you are in a special situation, such as needing permits to enter protected wetlands or other bodies of water, it can take a long time and cost thousands of dollars to get the required building permit.

2. Closing costs

While many people are aware of the closing costs when buying an existing home, you will have to bear those costs when building a new one as well. In fact, if you can’t get a mortgage to build to permanent rent, you may have to pay the closing costs twice (once when you get your construction loan and once when you refinance into a mortgage loan after building your home).

Closing costs can also add up to several thousand dollars, especially if your home builder charges you a fee equal to a percentage of the value of your home at the end of your transaction – which some do. This would be in addition to the fees your mortgage lender and local community may charge for securing your loan and transferring ownership of the property.

3. Architect and engineer fees

If you can’t find a finished floor plan that will work perfectly on your property, you will likely have to pay an architect or draftsman to draft or modify plans and make sure they comply with local regulations.

You may also have to pay engineering fees for things like drawing up a drainage plan or grading your driveway – depending on the property, neighborhood, and local requirements.

Sometimes your builder pays these costs for you and includes them in the price of the property. But in other cases, you will have to pay for them separately and manage the process of hiring an architect or engineer yourself. In either case, you are ultimately responsible for the cost of these services.

4. Set up utilities

After all, you need to connect your new home to water, sewer, electricity, internet and cables. And in many cases you will have to pay a fee to make those initial connections with the utilities.

While this is not a huge expense, it can be difficult to cover on top of all of these other unexpected fees during your project. To make sure you are not unprepared for any of these four major expenses, ask your builder what to expect in advance and incorporate those expenses into your home purchase budget.

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