Tips For Buidling A New Home - How to Make Sure the
Process Runs on Time and on Budget
a Construction Loan
The typical construction loan is a temporary financing that supplies the
borrowers and their contractor with the money to construct a new house.
The construction loan in some cases will only cover the actual building
of the house, and not the procurement of the lot on which it will be put
up. Construction loans are riskier for the lender. The general practice
is for the temporary construction loan to be refinanced with a “permanent”
mortgage loan, upon completion.
A new construction to permanent loan
program combines the construction and permanent financing of your project.
You qualify for the loan once, lock in the permanent rate, sign one set
of loan documents and have up to 12 months to complete the construction.
For the duration of the construction period, interest is charged only
on the funds that have been paid out. The permanent loan period starts
when the project is finished.
for Choosing a Builder
The most critical factor in successfully building a new home
is the builder you work with. To protect yourself:
1. Define practical essentials such as electrical outlets, air conditioning,
and number of bathrooms before the project is started.
2. Negotiate a fair price.
3. Get a warranty – reputable builders offer good warranties and
stand by them.
4. Get everything in writing.
5. Read your contract carefully.
6. Protect against delays – only close escrow on your new home when
the work is completed.
If you pick a lemon of a developer, not only are you likely to suffer
during the building and closing of your new house, but you’re likely
to have long-term problems after. You have several choices. You can choose
a large local developer, with successful developments around the area.
Or, you can find a small builder, who often has everything riding on a
Avoid Home Design Fads
With the $233 billion remodeling business flourishing – up more
than 50% from 1993 to 2003 – producers and sellers are pushing more
alternatives for floors, countertops, bathroom fixtures and other stuff
that costs tens of thousands of dollars to install and rip back out again.
So if you’re considering installing open cabinets, floating staircases
and bowl-shaped bathroom sinks, ask yourself which of these trends is
likely to die before the end of the year.
the Lot that Works for You
Which is of most concern when you’re thinking of buying a lot –
wildfires, wind, hurricanes, flooding, tornadoes, earthquakes, winter
ice or summer sun? In addition to every one of these, location –
length of commute to work, suitability of schools, neighborhood, distance
to shopping, and taxes, should all be taken into account. And if you buy
your lot in a subdivision, CC&Rs (Covenants, Conditions & Restrictions)
can be crucial.
The Construction Process
To get a handle on the construction process and what to expect, spend
an hour or so perusing the home building section of your local bookstore
or library. However, familiarity with the general home building process
is not enough. You need to have your architect carefully explain how to
read a set of drawings early on. Or you can take a plan reading course
at your local community college.