What if the estimated cost of building your new home based on the initial design exceeded your stated budget? Even with close consideration from the builder during the design phase, a "busted budget" can occur.
Homebuyers must guard against the temptation to go overboard during the design process of building their dream home. Extravagant decor selections coupled with increases in material and labor costs during the design and bidding stages is enough to start a bad dream.
There are three basic ways to cure a busted budget:
Increase the budget With additional funds available or the ability to borrow more money to build your home, you have cushion. Using existing cash reserves, down payment assistance,or additional borrowing capacity at this phase will allow you to increase your budget easily, but be careful because changes, upgrades and over-runs are still to come.
Alter the specifications Small budget overruns may be diminished by downgrading some of the home's features or by delaying the finished hot tub or landscaping until some time after the home is finished. These changes can be heartbreaking, but this approach still allows the project to go forward as planned.
Modify or redraw the building plan As a last effort, start over with a more modest plan or change the design to bring the home within your budget.
It can become especially stressful for buyers who haven't been budget conscious during the design phase. Plan in advance a realistic budget and stick with it.
