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Home Building Checklist: 5 steps to prepare you for home building success

Posted by Jessica Akright on Jan 26, 2017 21:00:00 PM

Topic: ALL

Home being built

Take charge in building your dream home. By following these simple steps, and asking the right questions along the way, you can position yourself for home building success.

EVALUATE YOUR FINANCES

  • Get your finances in order. Check your credit report and clean up any issues that could impact your ability to apply for a construction loan.

  • Determine what you can afford. Start by factoring all the costs associated with building – the cost of land, local fees and taxes, design and engineering fees, construction, and finishing touches. Establish your budget and determine what you can afford for a down payment. An experienced loan officer can help you with this important step.

  • Get preapproved for your construction loan. Talk to your bank or lending institution to find out how much you can borrow based on your income, fixed expenses, other debts and savings, credit and employment history. At this time, you can also discuss construction loan programs and what you may qualify for.

RESEARCH YOUR BUILDER OPTIONS

Do some research on the types of builders working in your area and decide which builder is the best fit for what you want in your new home.

  • Production Builders generally build all the homes in a subdivision they own or have developed. These homes may be somewhat similar with slight variations in exterior facades and interior floor plans. Their costs may be lower because they install the same style of fixtures, cabinets, heating and plumbing systems, windows, carpeting, paint, doors, etc. in every home, even though you may be able to customize some of these.

  • Semicustom builders, like production builders, offer standard home plans, but generally allow you to make more modifications, including to the overall home size. They usually have a base price and add to that the cost of any additional square footage and custom features.

  • Custom (design/build) homebuilders specialize in one-of-a-kind homes and, if you have not already worked with an architect to design your home, will have design professionals to help with your home design. They will build on your lot or may have an inventory of lots for purchase.

  • Modular Built and Manufactured Homes are increasingly popular because they are prefabricated in sections in a climate-controlled factory setting and then delivered to the building site. There are usually a variety of designs to choose from (some modifications may be permitted), and they must be built to applicable federal building codes. The foundation, the installation and all utility work, as well as final inspections, are done locally. Costs may be lower than homes fully built on-site, but not always. Financing for these types of homes may not be handled the same way either, so it’s important to check with your lender.

MAKE A DREAM HOME WISH LIST

Take some time to think about what you envision your dream home to be.

  • If you know what type of homebuilder you prefer to work with, talk to as many as possible and look at the home designs they offer for ideas.

  • If you opt for a more custom approach, start touring models, and looking at magazines and online home designs.

  • Start making your wish list. You can use these questions as a starting point:

    • How many bedrooms do you need?

    • How many bathrooms do you need?

    • How big of a master bedroom do you want, and does it need to be on the first floor?

    • How big do the other bedrooms need to be and how far away from the master bedroom?

    • What type of kitchen do you need based on your family and lifestyle? Do you want high-end appliances, a large or small pantry, as many cupboards as possible, fixed or roll-out cupboard shelves?

    • Do you want a great room or separate living room or both?

    • Do you want a formal dining room?

    • Do you prefer a first floor or basement laundry room?

    • Do you need a home office, exercise room or playroom for the kids?

    • How much storage space do you require?

    • Do you want a finished basement right away or do you plan to finish it later?

    • How large of a garage do you need? Will it be used for cars, storage or both?

    • What type of outdoor living space do you want? A screened or regular porch? An outdoor kitchen? A large or small patio or deck?

    • What are your electrical needs, such as more indoor hookups or outdoor outlets for holiday lighting, generators or other power equipment?

    • Will you want a “totally connected” home with Bluetooth and all the latest digital features?

    • What are your energy-efficiency preferences? Have you considered passive solar design and ventilation, skylights, or even the types of windows and doors, or HVAC systems you prefer?

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    Review your answers and categorize your list into "must-haves" and "nice-to-haves if the budget permits."

  • Compare your list to the builders you’ve researched. This can be helpful to find alignment between your design tastes and theirs.

SELECT A BUILDER

There’s no question too minor or topic too insignificant when selecting a builder. The people at the company you choose will become your partners for the next 6-12 months, so it’s important to check them out thoroughly before you commit. And, trust your gut, too, when making your choice. The following questions can help you in your search.

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    What recommendations have other customers posted online?

  • What references will they provide? Can you visit completed homes and talk with previous customers?

  • How long have they been in business, and what is their rating with the Better Business Bureau?

  • Will they build on your lot or only on their own lots?

  • Who will be your main point of contact once construction starts?

  • What change orders will be allowed once construction begins and at what costs?

  • What will the construction schedule be – from foundation preparation and frame construction, to finishing, utilities, painting/staining, grading or landscaping? What could impact that schedule and what are the cost ramifications if they get off schedule?

  • When would they start your home and when would they anticipate completion? Can they stick to a construction schedule if you have to vacate your current residence on a specific date because the lease is up or new buyers are moving in?

  • Will they obtain all necessary utility and building permits?

  • Do they have general liability and workman’s compensation insurance coverage?

  • Will they allow weekly site visits so you can check on progress and workmanship?

  • What building materials (exterior stone, brick, doors, windows, driveway) and interior fixtures and features will you be allowed to select (flooring, countertops, woodwork, cupboards, plumbing and light fixtures, paint and stain colors). What will be the timing for those decisions?

  • Will final driveway, sidewalks and any landscaping be included in the cost?

  • Will gutters be trenched to divert rain away from the foundation and trenched under walkways to avoid icy walks in cold weather?

  • How will they handle radon remediation if that is an issue in the area?

WORK WITH YOUR BUILDING PARTNERS

Now that you’ve made the most important decisions, it’s time to get to down to work with your partners in this effort – your builder and your lender. It’s important to be thorough and remain organized. Document all conversations and meetings, and confirm all decisions and changes in writing. You can never be too detailed once the process begins.

When working with your builder, here are some points to keep in mind:

  • Can your builder suggest improvements to your wish list OR ways to cut costs?

  • What is your role (if any) in the permitting, installation and hook-ups of water, sewer, electrical and more?

  • Ask about possible additional fees that could be incurred during installations, inspections or sample unexpected issues that have occurred during other construction projects to avoid as many surprises as possible.

  • Make sure all required inspections take place – from foundation footings and backfills, to water, sewer, electrical, plumbing and final occupancy. Ask how you will be informed of inspection results.

  • What safety features are included, such as smoke and carbon monoxide detectors? What additional exterior safety lighting or security cameras do you want to include now or allow for adding later?

  • How quickly will they take care of lot cleanup (construction debris removal) once construction is finished?

  • How and when will the review prior to occupancy be scheduled and how long will any corrections on your punch list take?

  • What type of warranty do they offer upon completion? What is included, what are the terms, how do they respond to problem requests?

When working with your lender, here are several key steps to take:

  • Be sure the final price you are given for the home you design and or agree to have built matches the amount for which you’ve been approved by your mortgage lender. Stay in touch with your lender if anything changes. If you have a one-step construction loan and mortgage loan, you may have to pay out-of-pocket for any additions or changes you make during the building process. If you have a construction loan and will later close on a mortgage when your home is done, it’s still important to stay in touch with your lender if you make any changes.

  • If you are having trouble selling the current home that you planned to use as your down payment, discuss other options with your lender.

  • Don’t incur any additional new debt once you’ve been pre-approved for a construction loan or it could adversely affect your income-to-debt ratio and impact your loan approval.

  • Be sure to keep current with your other monthly obligations and debts so you don’t adversely affect your credit core – especially if you won’t be finalizing the actual mortgage until the house is finished.

  • Make sure you set some funds aside for unexpected or unplanned expenses. There are almost always extra expenses when building and your lender may not be able to increase your loan amount.

DOWNLOAD our comprehensive financing and building guide full of tips and information to help you get started.