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Return to Buying A Home
Home Construction - Basics
Tired of house hunting and just seeing badly maintained homes?
Today's market has many homes for sale at prices that may be out of reach for you and your family. Finding one that fits your particular needs and design, is in good shape, and at the right price can be next to impossible. If you've been out there and can't find what you really want, it may be time to consider other options.
What if I could show you a better way to get into a new home that's custom built to your family's needs for less money than buying the typical 30+ year old Northern Virginia home - would you spend an hour with me?
OK, how much can you save on the home you're dreaming of?
Probably a whole lot more than you think. Ask yourself why you're buying someone else's headaches? When you build a new house - it comes with a home that's specified exactly to your tastes - after all, you designed it. Even if you purchase a home in a development , you're paying a developers profit and it's probably a compromise on your real requirements and quality. When you build your own home, you get to choose what quality of home you'll provide for your family.
Now there are are a couple of ways that you can build your own home.
There are basically two options:
- Go for a pre-built/pre-fabricated home that's built to your design and specifications in a factory. The home is shipped in individual units to your lot and assembled on-site.
- There's the build from scratch with you as your own project manager. This option also includes major remodelling and teardown/rebuilds. Even if you can't find a vacant lot, market factors have made it so that many old homes in desirable neighborhoods can be purchased, demolished, and a new home built in its place.
Most people shy away from building their home because of fear. Fear of the unknown; fear of cost overruns; fear of having to spend so much time at the site; fear of having to carry two mortgages while the home is being built. You don't need to fear these if you employ the right experts - architect, contractor, and construction lender. Let's talk and see how we can all work together and how you can get a construction loan as opposed to a mortgage while your dream home comes together.
How long does it take?
This really depends on how you want to proceed and the type of home you want. Every home is different. Some homes are completed in 3 months, others take closer to a year. The more complex the home, the more likely it is to take a longer time. I do not believe that building a home should be a race for quick completion, but a scheduled project for a quality home. Accurate budgeting and scheduling up front will make the building process much easier and quicker.
One last word, don't discard the pre-built/pre-fabricated home. They can be customized to your family's needs and once built in the factory and transported to your lot, can be installed in as little as one week (this assumes that the lot has been prepared with the foundations etc.). They are also less expensive and built to rigid standards.
Why Do People Build Their Own Home?
People build there own home for a variety of reasons. Some do it for better control over the quality of their new home. Others do it to save money. Some people have moved in with over $200,000.00 worth of equity. Most do it however because they don't believe in paying someone to do work that they can easily do themselves.
Building your own home can be one of the most rewarding projects you undertake. You have the opportunity to not only design the home, but stay actively involved in the construction process. People who get involv ed in the construction have a tremendous sense of gratification and accomplishment once their home is completed.
You can make sure that you are getting the best home you can afford, with features that you like, at a reasonable cost. Owner involved building can also give you the opportunity to stop renting and get into your own new home. You can build your dream home in a neighborhood that you would like to live in, instead of settling for an existing home which may need extensive repairs.
What Would Your Responsibilies Be As An Owner/Builder?
Being an owner involved home builder is an exciting and challenging project! You get involved with home design, finding and selecting land, budgeting and financing, obtaining permits, coordinating and scheduling, all the way through to home completion. You can even do the work yourself or have friends help you save money. Some people actually get involved with every step of the building process while others simple coordinate the project and paint the interior of the home.
To get the most out of the building process, and to save money, you work off your strengths and get other people to help you in areas where they are better. For example, if you know how to wire your home you should do it. If you are not able to roof your home, have someone else do it.
Can Your The Home Plans Be Customized To Your Needs?
Yes, almost 100% of any pre-built projects are custom homes. If you are going to build a home for your family you should be able to pick a plan which suits your lifestyle and building lot. Each project is as individual as each client.
Why Are There So Many Different Prices For Building Homes?
Each and every client has different building needs for themselves and their building site. Codes vary throughout the state. What works in Fairfax, VA., is going to be different than Loudon, VA., or even Prince William County. Each project has its own set of requirements. Slabs are customary in some areas, while others dictate basements. Some building sites are flat, while others are hillside. The details of a project can change the cost of the home.
Remember too that each County and Municipality is different and therefore has different codes.
How Much Money Do You Need To Start?
I work with clients and have lenders that will pre qualify you for construction loans at no charge. I, for one, want to make sure the project is viable for you prior to spending any money. Once you are comfortable with the program, it's usual for the lender to request a deposit to order blueprints, full credit checks, apply for the loans and order an appraisal. Together these cost about $1,000.
Where Can You Build And Who Locates The Land?
You can build anywhere you would like. I can help you in the city, rural areas, subdivisions or raw acreage. I believe you should choose the land on which you would like to build. Also remember that some construction loans even provide the money to pay for the land 100%.
How do you get started in this venture?
When you order a set of blueprints for your home, you'll start to get involved with a builder to transform those two-dimensional plans into a home. Additional professionals will also become involved throughout this home-building process. Along with your builder, some other key players may include subcontractors, a local architect, a mortgage broker, an interior designer, planning and zoning officials, and city or town inspectors.
Construction cannot begin without adequate financing. Since the average homeowner doesn't have several hundred thousand dollars laying around at his or her disposal, the necessary funds can be obtained by taking out a mortgage. By working with a mortgage broker or banker, you can secure a Construction Loan, which will finance your project. Typically with this type of loan, the bank advances money to the homeowner in partial payments (who passes it on to the builder) as various stages of construction are completed.
In addition to needing the money, you'll also need to get permission to begin construction from your local municipality. Though every community differs, typically a planning and zoning board exists to ensure your building site meets local standards and regulations. Your local building officials will review your plans and the proposed site; once you have their approval and receive a building permit, you are free to begin construction.
Another person with whom you may choose to consult before building your home may be a local architect. Even though the plans you've received are ready to be built as-is, you and your family may have specific needs or desires not already included in the existing blueprints. In addition, many communities require local certification before you can begin construction. Your builder can help you determine whether you will need to consult with a local architect.
While an architect would handle any structural changes you may request, an interior designer is another professional you may hire to assist you with making countless decorating choices throughout the home. If you've got a specific look in mind but are unsure of how to go about achieving it, an interior designer could help you make sense of virtually endless paint swatches and carpet samples, lighting and plumbing fixtures, and so on.
While you'll certainly come in contact with some, if not all, of these professionals, your main contact throughout the building process will obviously be your builder. As I mentioned earlier, he/she is responsible for taking the blueprints (a set of two-dimensional drawings) and creating an inhabitable, three-dimensional space. The builder, serving as the general contractor, will likely hire subcontractors to assist in the building process. Subcontractors are professionals in specialized fields, such as electricians, plumbers, carpenters, masons, etc.
A note of caution: It is best to have one person (i.e., the builder) in charge of hiring the subcontractors. Experienced builders have a network of subcontractors who they trust; they know which ones will do their jobs well and on-time and which ones provide shoddy workmanship. If you have a friend or relative in the construction industry whom you want to hire as a subcontractor (i.e., your neighbor is an electrician or your uncle installs hardwood flooring), beware. It is in your best interest as the client to allow the builder to hire his or her own subcontractors. The reason is simple: If something goes wrong either during the building process or after the house is built, your builder is responsible. If you throw your own subcontractors into the mix, and something goes wrong, it can be awfully hard to pinpoint blame ... and you could be the one footing the bill to have the problem fixed.
As construction proceeds, the builder will have city or town inspectors come through to check that the home complies with all local building codes. If the finished structure complies, he or she will issue a Certificate of Occupancy, which deems the home structurally sound and habitable. After receiving the Certificate of Occupancy, you and your builder will do a final walk-through and list any items that may need to be fixed or completed; think of this as your very own "Quality Assurance" review.
Over the next several months, you'll likely come into contact with many professionals who are eager to earn your business. Just remember that it's best to keep things simple — and, if possible, to have one person responsible for the overall building operations.
Where does all the money come from?
Finding the money to build a new home differs from taking out a conventional mortgage on an existing home, because to build a home, you essentially need three loans: one for the land, one for the construction phase, and one for the permanent financing of the home after it is built.
But the process is not nearly as difficult to navigate as it may seem, as many lenders combine these three loans into two or even one loan. Here is some basic information about the process to get you started:
Buying land: Most lenders are cautious about lending money on raw land because it can often be difficult to resell in case of default. Those that will lend may want a large down payment — 20 percent or more — with a high interest rate. It might be best to pay cash, if you can.
Building the home: In order to build, you'll need a construction loan, which isn't available through all lenders. Those that do will require blueprints and specifications, appropriate permits, and a licensed bonded contractor before they will consider lending for construction. This type of loan allows the contractor to make draws on the total amount of money as each phase of construction is completed. The lender may want to inspect the property to insure that the work has been done.
Permanent financing: Once the home is completed, construction financing ends — which means that loan must be paid off. Usually, this happens with a permanent loan, the same way any real property is refinanced.
When each of these three loans is accomplished separately, there are three closings and all of the attendant closing costs, legal fees, and taxes. Combination financing, which ties together all or at least two of the loans, minimizes these costs and paperwork.
One unique approach is a rollover loan, which allows money for the purchase of land, construction of the home, and permanent financing, all in one package. You need to qualify only once and pay only one set of closing costs. Or you may be able to tie only the construction and permanent loans together, if you've already purchased the land or intend to pay cash for it. In some cases, you may be able to use the equity in the land as a down payment for a construction-to-permanent loan.
Every lender is different in their approach to construction-to-permanent loans. Contact me and I'll help you find a good reputable lender with experience in Construction loans to get you started.
For more information on home construction, please visit
Let me assist you along the whole process, just contact me and we'll sit down together for an hour over a coffee at your convenience and discuss your situation, the type of home you would like, the area that you would like to live in (commute, facilities, etc.). From there, I'll provide you with the names of a few lenders that will best fit your particular circumstances..
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