If you've been on the hunt for the perfect home for months or even years without success, it might be time to consider building a custom home tailored to your family's needs. While buying an existing home may seem more cost-effective, creating a home from scratch allows you to have exactly what you desire, even if it means spending a bit more.
Embarking on the journey of building a new home can be both exciting and overwhelming for you, but for the builder, it's just another day. To ensure your dream home becomes a reality, it's crucial to actively engage in every step of the home-building process.
Once you have a realistic understanding of the type and size of home that fits your budget comfortably, you are ready to start building. While you may never feel completely prepared, similar to becoming a parent for the first time, if you have the drive, dedication, and financial readiness, then take the leap and go for it!
Is New Construction Right for You?
For most people, building a custom home is a once in a lifetime opportunity and can be really exciting! It can also, however, be intimidating, especially if you're not adequately prepared or don’t have the right team behind you.
If you're thinking about building your custom dream home, download our DRG New Construction Guide.pdf to assist you in determining things to consider and questions you should ask yourself and costs to compare before getting started.
Choosing Your Builder
When considering a planned development, it's important to check if there is a designated builder or if you have the option to bring in your own. If the lot offers flexibility in choosing a builder, it's essential to research reputable builders in your area known for maintaining high work quality.
- Some builders may not fulfill their commitments, compromise on materials, or leave certain aspects unfinished. It's advisable to meet with multiple builders before making a decision.
- Make sure they are well-organized and have good communication. Confirm that the builder designates a contact person to keep you updated throughout the construction process, indicating when decisions need to be made and the timeline for each phase.
- Before finalizing any agreements, thoroughly investigate the builder. Inquire about any complaints filed against them, and ask for references from previous clients. If possible, visit a model home or a recently completed project, and consider bringing someone experienced in evaluating workmanship quality.
Our New Construction Guide also has some great questions to ask each builder to decide.
New Construction Home Loans
A construction loan is a short-term financial solution designed to cover the expenses of constructing a custom home. This type of financing differs from a mortgage and is classified as specialty funding. After the house is built, the future resident must seek a mortgage to finance the finished property.
Moreover, various other loan options are accessible for home construction, ranging from constructing a new property from the ground up to renovating an entire house. Whether you are beginning with a land loan or undertaking a complete home renovation, there is likely a suitable loan option available for your needs.
- Construction-Only Loan
This type of loan is typically short-term, usually lasting for a year and designed specifically to cover the construction phase. Many lenders refrain from offering this loan due to its higher risk factors, such as relying on the builder's cooperation, obtaining approvals from local authorities, and other variables. Consequently, these loans are more challenging to qualify for, and they usually come with higher interest rates compared to traditional loans. Moreover, if you opt for this option, you will need to pay an additional set of loan fees when you apply for a standard mortgage.
- Construction-To-Permanent Loan
Construction-to-permanent loans offer a financing solution for individuals interested in constructing custom homes. Similar to construction-only loans, construction-to-permanent financing involves a single loan that covers construction costs and later transitions into a permanent mortgage. Throughout the construction period, borrowers are required to make interest-only payments.
- End Loan
An end loan is a typical mortgage that a homebuyer (building their own home) can seek once the new home is built. In contrast to other construction loans mentioned earlier, these are commonly provided by mortgage lenders. Once the construction of the home is finished, you can apply for an end loan. A notable advantage of an end loan is that the mortgage process for a newly built home is identical to that of any other home.
Building Timeframe
Constructing a house may span from six months to two years, influenced by various factors like location, architectural style, floorplan size, weather conditions, and regional specifics impacting the construction duration.
While the allure of owning a custom-built home in a competitive real estate market is enticing, it's crucial to comprehend the potential commitment and waiting period involved in moving into your newly constructed residence.
Understanding all the variables and the general timeline from the beginning empowers you to make a knowledgeable choice regarding embarking on a new home construction project.
Our New Construction Guide has factors that influence the timeline and key terms that you should understand before signing your contract.
The Build Process
The guide also outlines the 10 steps of the building process and tips to help this process go more smoothly.
- Pre-Construction Meeting
- Site Preparation
- Foundation
- Framing
- Rough in Mechanics
- Insulation & Drywall
- Finish Carpentry & Painting
- Finishing Touches
- Homeowner Walkthrough
- Closing Day
Learning what the process entails helps take stress out of the build process. The guide also explains how having a Real Estate Advisor who has experience in the process can be a huge advantage.
We're looking forward to working with you to find your next home and can't wait to learn more about you and your family through the process!
