What You Should Know Before Building a Home
Are you considering tackling the job of building your own home? In many ways, this is the only way to get exactly what you want and need out of a home; and when the process is over, you will end up with a new space that perfectly matches your dream.
Yet if you've never worked through the home-building process before, you may feel a little overwhelmed. Here are some tips on what to expect and how you can be an active participant in this exciting process.
Plan Enough Time
Planning your exit from your existing residence and your move into your new home is always tricky. No one wants two house payments at the same time, but you need to know that building a home can take longer than you anticipate. It's always a good idea to have another lodging option or a short-term rental available should your home not be ready when your lease is up or your existing home sells.
The time it takes to complete a single-family home will vary depending on the size and scope of the project. According to the United States Census Bureau, the average time was around seven months in 2014. This includes about one month to start the building process after authorization and another six months to complete the construction project.
Set Your Budget
Building a home is a process that can nickel and dime you quickly if you don't set some boundaries. Make sure you know your budget, and then choose a home that you can reasonably build within that budget.
Keep in mind that upgrades — like hardwood instead of carpeting or upgraded appliances — which you may feel are necessities, will add to the overall cost of the project and may not be included in the builder's original quote.
Understand Your Lending
Building a home requires a different type of lending than buying an existing property. You can't take out a mortgage to pay builders, because you do not have a home yet to serve as the equity for the property.
Most people will take out a home construction line of credit which they use to pay the builders and subcontractors. Once the home is completed, the owners can formally apply for their residential mortgage, using that to pay off the construction line of credit with the better terms of a conventional mortgage.
Don't Forget Future Resale Value
Whether you intend for your home to be your "forever" home or not, you need to consider the resale value of the property as you build. Should you need to sell in the future, which is very likely for the average family, you need the right value.
Adding too many upgrades, which price the home out of the average for the neighborhood, or choosing a home plan with features that are extremely unique or dated can make a future sale difficult.
Keep a Mental Punch List
Right before your closing, you will walk through the construction and create what is known in the industry as a "punch list." This is a list of everything that still needs to be done to make the new construction perfect.
Your builder will need to complete these items before the closing, and typically the punch list is created about a week before closing. Keep a short list throughout the building process to ensure you don't overlook anything at this final walkthrough.
Choose the Right Builder
Your builder can make or break the process ahead of you, so choose with care. You want to find a builder with a solid reputation in your area with the right qualifications, such as membership of the National Association of Home Builders.
Select the Right Design
Finally, make sure you pick the right design. Start by deciding on the style of home you want, considering the look and feel of your neighborhood, then narrow the home plans based on the features, both interior and exterior, that you need and want.
Building a home from the ground up captures the American dream beautifully. Enter into this process with a full understanding of what to expect and what your options are, and you can enjoy it to the fullest.
Author bio: Chuck Tripp has over 20 years of experience in the residential stock house plan industry. He is currently Sales & Marketing Director at Donald A. Gardner Architects, Inc., a house-planning company that has been developing floor plans since 1978.