Building a New Home Checklist
Building a Home Versus Buying a Home
The home buying process can be a long, drawn-out and complicated process that can become a very stressful time. Very rarely can potential homeowners find an existing house that meets all of their needs, so often they are required to settle for a less than ideal property. The advantages of having a custom home built is that the buyer can customize the unit to fit all of the items on their “wish list.”
Obviously, there are some advantages to purchasing a pre-owned home, most notably would be that often, the process does not take as long as it would to build one from scratch. But that is essentially where the pros end. Building a custom home opens up a world of possibilities from choosing the home site that suits the buyer to having control over everything from the amount of bedrooms and baths to what kind of door handles will be used on the closet doors. The freedom of customizations opens up the prospective buyer to enjoy the full experience of a new home.
Everyone Has a Job During the Home Building Process
There will be scores of people and teams involved in the home building process and it is important to understand the roles and responsibilities of each one. Not only will it relieve the stress of the process, but it ensures no one steps on anyone else’s toes or wades into territory not well suited to their skill sets.
- The Homeowner: The homeowner is the core member or members of the process. A prepared homeowner is one that is focused on their needs as is able to clearly communicate them to other teams. They take the lead in the customization of the new home and provide insight and goals to many of the other teams.
- Real Estate Professionals: Agents and brokers play an important role in helping the homeowner locate an appropriate parcel of land to build on and take the lead when it comes to the legal paperwork that needs to be filed in order to successfully close a sale.
- The Builder: The builder and associated teams are in charge of the actual construction of the home. They interpret the plans provided by the building designers and communicate with the homeowner to ensure the work meets their vision. Homeowners are encouraged to consult with a number of custom home contractors before settling on a builder.
- Financial Representatives: A lending institution representative will work with the homeowner to get loan financing approved as well as ensure payments are made to the builder according the schedule they have set.
- Architects: These teams design homes and provide blueprints to the builder.
- Specialty Contractors: These teams deal with specialized aspects of the building process. They include electricians, HVAC professionals, roofers and concrete contractors.
- Government Officials: All towns and municipalities have inspectors who ensure the work is safe and up to code. The builder will work directly with these people.
Financing a New Home
Before any steps can be taken toward building a custom home, the homeowner must have financing in place. Often the lender will guide the homeowner through this process and take care of all the paperwork that is necessary to gain loan approval. The first part of this process is to gauge the buyer’s credit worthiness. This is done through the credit report process that will return a FICA score. Although the lender will run a report for the buyer, it’s always a wise idea to have your own report run beforehand so there are no surprises.
Choosing a mortgage after a loan approval is another important consideration. Mortgages generally come in 15 and 30 year terms. The former will have a higher monthly payment but the buyer will end up paying less interest over the live of the loan. Likewise, the latter will have a lower payment with a higher amount paid in interest.
Depending on the financial situation of the buyer, the down payment will be the amount the homeowner brings to the table at closing. Those that can afford the standard 20% down can go for a traditional loan while those that can afford less will most likely take on a FHA loan. While FHA loans cost less up front, borrowers will be required to pay mortgage insurance until the home is 20% paid off.
Selecting a Home Site
Once the financing is in order, homeowners can begin prospecting for potential home sites. Many builders will own a tract of land where buyers can select a lot or they can find a lot elsewhere that suits them. A real estate agent can help with this selection process. Always remember these items when selecting a home site:
- Utilities: Does the lot have electric, water and septic access? If not, the buyer is responsible for those extra costs.
- Neighborhood: Buyers should always research the neighborhood before settling on a lot. Talking to the locals can also help with this process.
- Homeowner needs: The buyer should have a clear idea of the type of home site they want. In a neighborhood? In the woods or rural area? What type of vegetation does the soil support?
Selecting Custom Features
Perhaps the most exciting part of the home building process is the customization of the new home. Homeowners generally are able to choose everything from kitchen cabinets to tile and grout colors as well as carpet colors and the location of electrical outlets. Customization also includes light fixtures, building materials (roof shingles, Tyvek, lumber, etc.) Homeowners are wise to have a detailed outline of their needs before entering into this process.
Understanding How Long it Takes to Build a New Home
The building process can take anywhere from four to six months or even longer depending on the customization and government inspection process. Most builders will provide a general timeline for the buyer to use as a reference point. Prospective homeowners should always obtain a timeline from the builder and follow up if the timeline is not being met.
Need more resources? Check out out Build On Your Lot step guide.