| Complete Our Secure Online Form
|
|
|
| You Receive Up To Four Offers
|
 
|
The Do's & Don't Of Building Your Dream Home
First in a series: Deciding On A Design, Getting It Rendered And Fixing
A Budget.
The Lack Of Supply, And Increased Demand For Houses, Can Encourage People
To Make Certain Decisions.
By The Mortgage Guy / MortgageLoanRequest.com
You've scrimped and saved and you've
sacrificed a lot. You've gone out and looked for property to invest in,
but the law of supply and demand has not been on your side. Then you decided
to look into having this home that you've yearned for built especially
for you, and again, you run up against the laws of supply and demand.
There are either not enough qualified building contractors in your area
and they are all too busy, or they're way out of your budget range and
unobtainable Then you get this fantastic idea that you can build it yourself;
get exactly what you want and save time and money in the process.
Does this scenario sound all too familiar? Well it's a trend these days.
Many people across America are shut-out of the property markets, because
there are just not enough good homes available and the industry can't
build them fast enough. People with disposable incomes have been investing
in real estate like never before. This lust for property investment has
also helped to drive the cost of homes beyond the median levels, and first
time or middle income home buyers have been kept out of the property market
by this factor, as much as any other. Many people think they can better
their odds if they build it themselves.
Contractors are working day and night to supply America with homes. Most
are short handed and cannot find the time to build all the homes that
they could sell. Many people, thinking that they are smart and capable,
have turned towards the option of being there own General Contractor and
are attempting to do the job themselves. They mistakenly think that they
can do this; after all, they're smart, they've undertaken other difficult
projects in the past, and they've come out of it ok, but building a home
is not as easy as some people may think and the hazards along the way
can trip them up at every turn.
We are not trying to dissuade anyone from building or renovating a home,
it can be an extremely rewarding experience on many levels. What we want
is for folks to understand the journey they are about to embark on. We
want to help educate them to the process, and then see them move into
a new or refurbished home with the least amount of impact on their lives
and budget.
Note: Before you start to read this next piece of advice we encourage
you to use our Mortgage
Qualification Calculator and/or our Renter
Mortgage Affordability Calculator to estimate what your construction
or renovation budget could be. There is no need to sets your sites to
high or to low, and these calculators are a useful tool to do just that.
Having a very good idea of your affordability range is more than just
helpful when dealing with lenders, architects and contractors; it's
a basic requirement for your success.
Step: 1 Deciding On A Design, Getting It Rendered And Fixing A Budget
There are many aspects to building that you will be able to teach yourself
and become fairly proficient at, but a good solid design, that is structurally
sound, regulation compliant and functional all at the same time, requires
an architect. After you have shopped around and found the right one for
your needs, make a list of all you personal requirements, ask them what
other information they may require and set a time for you to do your planning.
At this meeting be prepared to set a ball park budget, explain in detail
the kinds and number of rooms you will need and the types of materials
and amenities you are looking for. Also, provide them with a plot plan
of your property and an overview of you chosen neighborhood. Go to the
site to survey the plot with them and discuss all the possibilities for
placement, access and view.
The design of your home is important and it must conform to its surroundings
for it to have any value in the future. You may have found a plot that
suits your budget, but if you then go and construct a home that is non-conforming
you may never realize the full potential of your investment.
Example: You do not want to construct a two-story, three-bedroom
Colonial on a street that consists of 1950's single-story bungalows.
It just doesn't make good investment sense. Nor do you want to build
a dwelling in a nonresidential neighborhood, even if local zoning would
allow for it. A home, for most people, is the single greatest investment
of their lives. Good sense will help to protect that investment.
Once your architect has come up with a design you will need to make certain
that it is exactly what you want. Many architects have an "artistic"
side and they may suggest features that are either out of your price range,
purely esthetic or just not your style. Be certain that they design your
house, not theirs, one with function as well as form. Do not rely solely
on the architect's judgment of what your costs will be, you must be certain
that the house they have designed is within your budget to build. Here
are two other ways to get comparative construction cost estimates, and
between the three, you should be able to come very close to knowing what
it is going to cost you to get your home built and move your family in.
Go to the neighborhood where you will be building your home and look for
houses that appear to be of the same style and size as the one you wish
to build. After all, you are supposed to be trying to conform to this
neighborhood and there should be examples for you to look at. Start knocking
on doors and talk to your future neighbors. Find out if they built there
homes themselves or made sizable renovations, and if so, ask them to sit
down with you over dinner to discuss it. This may sound more difficult
than it really is but most people are proud of their homes, especially
if they built or renovated them themselves, and they would be glad to
tell you their story. Ask them who did the work, how much did it cost,
and how long did it take. The time factor is just as important as the
cost, you may have all the time in the world but lenders do not.
Note: Most construction loans have a very specific time frame
for the actual building phase, with a predetermined timeline that notes
each and every step of the process. The three steps to each phase are:
when it is to be completed, inspected and invoiced for. The first phase
of a construction mortgage consists of interest only payments and therefore
the lender is always pushing to get into phase two as quickly as possible.
Phase one must be completed before the permanent phase of your mortgage
kicks in. If you over shoot your time schedule for completion there
are most always heavy penalties to be paid. Please see our learning
center for more thorough information.
At the same time you are talking to your neighbors find a local builder
or developer, and also ask them to sit down for a consultation. These
people should have years of experience and know how, and they will fully
understand where things can go wrong, what to look out for and how best
to stay on budget and course. Many are willing to charge you a fee to
consul and advise you.
These are the people to ask about zoning regulations, environmental considerations,
sewers and drainage, excavation work and utility installation and hookups,
to list just a few. These are some of the more costly and involved aspects
of construction and you will need good sound advice. Ask them what the
average per square foot cost of construction is in your area. The national
average can range anywhere from under $100 dollars, to well over $200
dollars, for the same basic product, so a local perspective is very important.
If you are paying them a fee, strictly to consult, you should get some
good answers and sound advice. If you were to approach a contractor, who
is apt to think he can dissuade you from doing the work yourself and then
hire him, he may tell you stories to frighten you and put you off of the
idea of building by yourself, and he may also offer unrealistic budgets
to win over your business.
Once you have spoken to your architect several times, the home owners
and a developer or two, you should have enough information at your disposal
to analyze your specific situation and come up with a manageable project.
This information you have been gathering is also of relevance when it
comes to your prospective lender and being approved for the funding you
will need. If a lender is approached, and they know that you will not
be hiring a contractor with experience and a proven track record, but
they can sense that you fully understand the depth of the water, proper
financing is much more attainable. But if you make the mistake of applying
for your construction financing, without being fully prepared, the lender
will naturally assume that you have not done your homework, do not understand
the scope and seriousness of the project, and he will most certainly turn
you down or ask yo to come back at a later date.
Next in the series: Building Your Own
Home Part 2: Finding Subcontractors & Staying On Track
|
