4 Surprise Costs When Building a House

Be prepared for these big expenses.

Building a home can be a fun process, but it can also be expensive. While you may anticipate costs for things like upgraded countertops or custom details, you might incur some other expenses that you don't always think about up front.

Here's what they are.

1. Permit fees

There are a lot of permits involved in building a new construction home. Your builder will typically file for permits to construct the property and for any permits necessary for things like wells or septic systems. But the cost of those permits will be passed on to you. In many cases, that can total thousands of dollars.

And if you have a unique situation, such as needing permits to impact protected wetlands or other bodies of water, then it could take a very long time and cost thousands of dollars to get the necessary permission to build.

2. Closing costs

While many people are aware of closing costs when they purchase a pre-existing home, you'll also have to incur these expenses with a new build. In fact, if you don't get a construction-to-permanent mortgage, you may have to pay closing costs twice (once when you get your construction loan and once when you refinance to a mortgage loan after your home is built).

Closing costs can also add up to several thousand dollars, especially if your builder charges you a fee equaling a percentage of your home's value at the end of your transaction -- which some do. This would be on top of any fees your mortgage lender and local municipality charge for securing your loan and transferring ownership of the property.

3. Architect and engineering fees

If you can't find a completed floor plan that works perfectly on your lot, you'll probably have to pay for an architect or drafter to design or modify plans and make sure they're in compliance with local code requirements.

You may also need to pay engineer fees for things such as making a drainage plan or grading your driveway -- depending on the lot, neighborhood, and local requirements.

Sometimes, your builder takes care of these costs for you and works them into the price of the property. But in other cases you have to pay for them separately and manage the process of hiring an architect or engineer yourself. Either way, you'll ultimately be responsible for the cost of these services.

4. Setting up utilities

Finally, you will have to get your new home connected to water, sewer, electric, internet, and cable. And in many cases, you'll have to pay a fee to get those initial connections with the utility companies set up.

While this may not be a huge expense, it can be hard to cover it on top of paying for all these other unexpected fees during your project. To make sure you aren't unprepared by any of these four major expenses, ask your builder up front what you can expect to pay and build those costs into your home-buying budget.