Friday, December 4, 2020

Custom Home Building Process and Financing!

During your initial meeting with your builder your budget needs to be discussed. Lot prices vary drastically with area, so your budget and your builder’s knowledge of prices are important for you to find the right area of the town for your budget. If you already own a lot then just the house budget needs to be clarified. The lot size and location has a broad impact on your home. If it is raw land then you may need a well or septic, it may need an engineered pad site. You may be required to get a hydrology study performed so you can receive a permit. You want to avoid a flood plain issue. Your builder needs to be well versed in all these potential aspects. If you have or like a developed lot or city lot, you should have all your city utilities, but that should be confirmed. The lot size obviously impacts the design of the home. Zoning needs to be confirmed so that your design will be within the required setbacks. Your builder should be familiar with the lot or building requirements in the area. All the above items can have an impact on your design and budget. Once you have figured out your home size, have zeroed in on a lot budget, and have checked for availability, you are ready for the design process. The design of your home needs to stay within your budget. Most builders have a designer or architect they work with, and can either help facilitate the whole design process or have you work directly with the designer. Your builder should be able to help critique and give pointers so you have cost ideas or figures in mind as you design. From your conceptual design your builder should be able to get you an initial budget with some contingency for error. If you, the lender and the builder are comfortable with the budget you can move forward with the design. Depending on your preference good custom builders will manage this process for you and help you select an architect / designer so you don’t have to piece together the process yourself. Typically depending on each client the design process should take around a month. You should still be on track with your lenders pre-approved budget. Now you have a plan and a lot selected. Now it is “solid budget time”. A good builder will focus on transparency in pricing for their clients. Expect a good builder to go over all your specifications and discuss your “must have” items and your “want to have” items. A good builder will be networked with good local subcontractors and trades so he will understand the best options for putting together a cost-effective high-quality project. Good builders have a list of pre-qualified local contractors and trades so they can select the lowest bids from a group of qualified trades. Next it is time for the appraisal. You already have plans, a true construction budget and a lot budget. If the loan is approved, you can move forward. If not, then you haven’t wasted too much time and money since you followed the steps in the right order and didn’t spend any more money than needed to get the basic answer “can we get approved for this”? You can also try different lenders of course and if you are using a good custom builder they will act as a consultant and be able to steer you to the lenders that will be most likely to get you approved. It is not unusual for any one of the steps in this process to have to be done multiple times to get the needed result. If you stick to this process you can be assured that when you complete the design phase, you will be able to build your new home on budget, get funded and meet your design-build goals. These steps may seem like a lot to digest, but a good builder and lender should be able to make it pretty simple for you and help answer any questions. When in doubt make sure you select a builder with years of experience and most important, choose a builder you feel comfortable with and discuss things with integrity and transparency.

Homechoice Planners

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