About a year ago now, we set out on our home building journey by accident. When our move down to Texas was imminent, we started looking for a house. Because we had previously looking for houses together and are self-proclaimed real estate experts with imaginary awards from HGTV like Most Valuable Viewer and Virtual Renovator of the Year, we knew exactly what we were looking for in our next home:
Large master suite on main level
2 living spaces
and 3 car garage
This house in our heads seemed SO perfect and SO well laid out that we just KNEW it was already out there and waiting for us to find it…we would find it within a matter of minutes with a quick search online. 3 months, 1 realtor, and a lot of frustration later, we came to the conclusion that this perfect house didn’t exist…yet.
Since finding a house that was already built didn’t work out for us, we were thrust into the world of building…we’ve learned a lot in the past year that could come in handy if/when you are getting ready to embark on turning your own dream home into a reality.
Step 1: Loan Pre-Approval
This is the really boring and really non glamorous part of all real estate transactions. Unless you’ve got cash to buy your land and build your house (high five if you do!), you will need to find a bank or credit union to finance this project. Most builders won’t want to give you a full commitment to pricing a house build for you until you are pre-approved for a loan. The things you need for a construction loan are typically the same as any mortgage: proof of identification, proof of income, proof of residency, etc. However, there are some different and important items to consider before deciding on who to finance your build through including:
- the bank/credit union’s relationship with builders in the area. Make sure that the financial institution has long standing relationships with builders in your area. Ask them for a list of preferred builders (if you haven’t already found one) and how long they have been doing business with the builder.
- Construction Loan experience. If the financial institution you are working with is new in the world of construction loans, you might have delays due to communication issues or learning curves. This isn’t necessarily a bad thing but something you will want to know up front.
- Draw Schedules and Closing Process. Be very well versed in exactly what will be expected of you throughout the construction process. Most banks require full underwriting at least once and sometimes twice. You also might have two closings and two closing costs to consider: one at the start of construction and one at the end.
- Terms– as with any mortgage, you will want to shop around for the best APR, down payment requirements, and closing cost structure for your family. Will they require you to own the property the house will be built on outright or will they finance the land in addition to the construction?
Step 2: Location, location, location
Before you can begin construction on your new house, you need land to build it on. This is the step that has a lot of variables when it comes to how you acquire the land; if you do not already own the property that your future house will be built on, some builders are also real estate agents and can help you find property if you need help with where to start your search. Some banks are okay with financing the cost of the land as well as the construction of the house while others ask that you own the land outright and apply that towards your down payment. Before deciding on where to pour your concrete consider:
- What will our family need in 1 year, 5 years, 20 years? Find a neighborhood that will provide amenities that your family not only needs now but will need in the years to come. If you have young children, what kind of schools and parks are in the area? If you have pets, what kind of side walks or trails are there nearby? If you’re an avid runner, are there places you can safely exercise?
- Observe the neighborhood at different times of day. Neighborhoods have different feels depending on the day of week and time of day. Check out neighborhoods under consideration on difference occasions. Things like school zones or neighbors who frequently host late night parties are things you will want to be aware of before deciding on a neighborhood.
- Check out the crime statistics of the neighborhoods. Especially if you are considering moving to a completely new area, check out the crime statistics in the area. Knowing what kind of crimes are being committed around you will help you make a more informed decision.
- Be aware of red flags. If the neighborhood you are considering has red flags for your family, just walk away. Red flags might include: loud neighbors, weird smells in the air, abandoned houses or overgrown lots, high rates of crime. There are plenty of neighborhoods with land available to build on. Don’t sacrifice your family’s comfort or sanity for the sake of a piece of land.
Step 3: Find a Builder
Since we didn’t have any friends or family in the area to talk to about reputable builders in the area, we took to the internet when looking for a custom home builder. We found Manhattan Builders on a lucky Google search and have been extremely pleased with the entire building process provided by Jon and his team. Before committing to a builder, do your own due diligence:
- Get multiple bids. As much as we liked Manhattan from our first meeting, to ensure fair pricing of the project, we met with 2 other builders before committing to them. You get the benefit of input from multiple people as far as allowances and specifications necessary for your particular house by doing this. You will also have a better chance to interview the builder and their team when you have multiple interactions and opportunity for discussion with more than one group. If you are going to build a house with a floor plan the builder already has, make sure you are comparing apples to apples: you can’t expect a house with laminate floors and formica counter tops to be the same cost per sq. foot as a house with hardwood and granite.
- Get (and actually call) references. Again, we REALLY liked our builder and felt like we could trust him from the get go. Does that mean we didn’t call all of the 13 people he listed as references? You bet we did. You want to know the nitty gritty- you want to know if a project was 7 months delayed or 15% over budget- call the references.
- Check them out on the local Builder’s Association and Better Business Bureau. With a simple internet search you will be able to find if a builder you are looking at is registered with and in good standing with these two organizations. Being a member in good standing doesn’t ensure that your construction project will be perfect but it does let you know that they are reputable enough to be included with other industry professionals in your area.
- Actually LOOK at their other projects. Ask the builders you interview to take you to a few projects they’ve done before. You want to see firsthand what kind of finishes they normally do and the craftsmanship they have overseen. Though most builders don’t physically do much (or any) of the labor on your house, they are in charge of the entire process and responsible for the final result. Seeing and being comfortable with projects they’ve completed is imperative.
Step 4: Design Your Dream Home
- Create your list of must haves. Like I said before, our must haves mostly consisted of space issues but we eventually had a much longer list including: separate laundry room, window seat for our daughter, as many windows for natural light as possible, a walk-in pantry, a laundry chute (one of the things my husband has always wanted), and industrial chef’s kitchen. My point is, take the time to really think through everything that you will NEED in a house to be the house you want to live in for a considerable part of your life.
- Find a Designer. Whether you start from just a design idea in your head or are using a floor plan provided to you by your builder, you will probably need a designer to look over the plans and make sure that the plans you have landed on fit the land the house will be built on.
- Ensure that the design fits who your family is today and who you will grow to be. If you know that you will be expanding your family, will one day need to work from home, or are planning on moving a relative in with you long term, make sure that your new house will accommodate all of your future plans.
- Look for inspiration everywhere. That crown molding at your mom’s house? Take a picture. The floor you LOVE at your favorite coffee shop? Take note. Use Pinterest or Houzz to store as much inspiration as you can and take it to meetings with your designer and builder. Make sure that they really understand what it is about each picture that you like and where you want to incorporate it in your design.
- The beauty is in the details. Your house will be made “yours” by the finishes you select. Take your time and be deliberate about the choices you make at this stage. The more detail you have when designing your house- how many coat closets do you need? Will you want built ins in your master closet? Will your guest shower be a tub shower or custom tiles? Do you want a walk in pantry? What kind of window coverings will go with your style?- the better off you will be. The detail ensures that you and the rest of the team (including your husband 😉 ) are on the same page as far as budget and must haves go. Not to scare you or anything, but you will be living with these decisions for.a.long.time.
Part Two of How to Build Your Dream Home is coming tomorrow! Are any of you thinking of building anytime soon? What is the thing you are most excited about?
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