Building a new home is both one of the most exciting experiences of your life, and one of the biggest investments. You want to enjoy the adventure, and that starts by making smart, focused building decisions.
To help make sure you get the home of your dreams the first time, here are a few things to think about before you start talking with a homebuilder:
1. Your Marital Status
While there’s no right or wrong marital status to be in before building a home, there are some things to consider for different situations.
Scenario 1: Building a home while you’re single
A bank’s lending standards might be more rigid while you’re single since you’re not working with two incomes, two credit scores, etc. Think about your career goals as well— could your career change in the next five years? What if you have to relocate? And if you do plan on getting married and having a family in the future, that will play a heavy role in your home design.
Scenario 2: Building a home while in a relationship, but not married
More and more couples are buying or building homes together before marriage. While there’s no harm in doing so, there are some risks involved. If this is your situation, you can help minimize the risk by simply putting together a partnership agreement beforehand.
Decide in advance what will happen if one or both of you decide to part ways. If you sell, who will choose the listing agent, the price, and how the net proceeds will be divided? Having the possibilities and resolutions laid out in advance will bring you peace of mind.
2. Your lifestyle
If you leave this part out of the equation, you could make poor design mistakes. Think about how you live your life today — do you host overnight guests regularly? Do you need a trophy room of some sort? What about your hobbies and habits? For example, if you enjoy going for walks or bike rides, is the location you’re considering safe?
One face of homebuilding commonly misjudged is the amount of storage space you need (now and in the future). The size of closets and built-in storage spaces are often underestimated in the planning phase and can be difficult (and expensive) to add later. Understanding your lifestyle and habits well in advance will make the planning and selection process that much easier (and your house as functional as possible).
3. Your Financial Situation
You’ll need to crunch the numbers to have an idea of what you’ll be able to afford. And when it comes to building a home vs. buying, the financing process is a little different. It’s up to you if you want to get pre-approved from a bank first or talk with a builder first, but in most cases, there are a few extra steps you’ll have to take either way.
If you decide to get pre-approved from a bank first, you’re ahead of the game. That being said, though, not all banks offer construction loans and some aren’t user-friendly when it comes to the process. A good builder will have relationships with many different banks and can help steer you to the bank that fits your needs.
Generally, you’ll need a construction-to-permanent loan. This includes a draw schedule that maps out what stages of the project the builder gets paid, which usually happens monthly — the bank will perform inspections at each stage throughout the process. Once your new home is finished, and you receive the certificate of occupancy, you can then close on your permanent mortgage.
Another Consideration: A Contingency Reserve
Regardless of who you decide to contact first, have you thought about having a contingency reserve in place? This is money set aside, on reserve, to cover unexpected costs during the construction process. It’s not allocated to one area of the work and simply acts as “insurance” against other costs. You should also check with your builder to find out how they handle changes and allowances, as you may not need to put as much in your contingency depending on how your builder handles these items.
4. Location, Location, Location
Have you considered all the local building codes and restrictions in the area you’re thinking about building? These codes can vary from state to state, even from county to county sometimes.
We recommend not purchasing a piece of land without having a building inspection to give you an idea of what you’re up against for things like lot requirements, driveway placement and regulations, attaining utilities, etc. For example, some communities have restrictions regarding overhead power lines, which requires installing underground conduit.
All things considered, the location and community you live in will have a greater impact on your life than the house you build. This is where you’re going to raise your family, send your children to school, attend church, establish friendships with neighbors, and make your trips to local stores. A lengthy commute might seem tolerable at first, but will it affect your quality of life over time? Try to think long-term when building a home.
5. Choosing a Builder
Finding a builder is easy, finding a builder that fits your wants and needs might take some time. For one, you should pick a company that shares the same design aesthetics as you. Secondly, always check their references — client testimonials, past work, etc.
Don’t be afraid to treat it like an interview process and ask every company these three questions (long before you actually sign a contract or start the building process):
1. Can you meet my timeline for completion?
2. Are there any concerns you have with building this home?
3. Have you worked with any of the specialty items I want to use in this home?
6. Prepare for Hiccups
Even if every last detail has been planned out, there are thousands of pieces that have to come together to make your dream home a reality — something unexpected will come up. It’s inevitable, but a good home builder will be dedicated to helping you anticipate these hiccups, guiding you through them as they arise, and minimizing your stress.
For our final tip, just remember that only you know what’s best for you and your family. A builder can make professional suggestions and you can ask friends and family for advice, but ultimately no one knows your situation, lifestyle, and needs like you do — listen to your gut.
Download our home guide to learn about all features that come standard with a semi-custom home.