How To Build Your Dream Home From Scratch
This is the type of information that gets me fired up!!! This is why I took those real estate courses - because new builds just have something about them that EXCITES me!!! I mean building homes sounds absolutely dreamy doesn’t it? But this dream doesn’t have to be saved for nighttime slumber. You too can build your own home too. Yes, I believe in you! It starts with education and believing that you can make the necessary steps towards conquering your goals. Don’t know where to start? Book a free consultation with me to talk about real estate, goal setting, business development and more.
Steps To New Construction
1. Know Your Timeline & Set Goals
Allow yourself to settle into this magnificent experience. This journey is going to be emotional, probably to bring tears of joy and frustration at times. These projects take time. I suggest taking a few hours to deeply meditate on your goals with your new build before involving contractors, agents, inspectors, etc. It doesn’t have to be perfect, but it sure can help. To stay organized, I enjoy using the app Airtable. Airtable is accessible both on desktop & mobile phone. Marquez & I create timelines for business on here all the time and I also use it for Real Estate. Find somewhere comfortable and quiet where you can allow your mind to concentrate. If you need help getting started, you can book a free consultation with me here.
2. Get Pre-Approved By A Lender
A simple way to start is by obtaining a pre-approval letter by at least one mortgage lender. Getting pre-approved helps tremendously because it helps determine what you can afford to spend on building a new home. Your lender should have a discussion on what type of financing is best for your new build. This will depend on the type of new construction and builder you’ll be working with.
You will most likely obtain a construction loan initially while the building process is still taking place. The Construction-only loan is short-term, typically 12-18 months and covers only what’s needed to complete the construction of the house. Construction loans provides borrowers with funds for materials, labor, plans, permits & fees, closing costs, and contingency and interest in order to construct their dream home. This loan also includes where the house will be built. Once the home is finished, your loan will refinance into a mortgage. I will write a blog post all about construction loans in the next few weeks!
3. Hire A Realtor
A Realtor is your team member when it comes to making sure all the bells and whistles are working properly. Without a Realtor to advocate for your best interests, you could potentially miss out on valuable negotiation opportunities that can help you save money. The builder will have his/her own Realtor, who is the listing agent. As for you, the Buyer, a smart move is to have your own Realtor on your side because they will swiftly guide you through the new build process. Realtors have market knowledge to identify potential issues with the land, title process and specific features of the home. They have negotiation abilities and will ensure your contracts are sound.
4. Choose the Right Type of Home and Builder
Next, choose the right kind of home. To learn more about types of architecture style homes, check out this list here.
Here are the different kinds of builds when it comes to customization:
Tract Homes - These properties are built within a new development or subdivision. The builder purchases a large tract of land and constructs houses on each lot and you choose your own lot.
Spec Homes - The builder selects the designs and floor plan, builds the property, and then sells a move-in-ready home. Sometimes spec homes can be moderately customized. You may be able to choose different finishes such as cabinetry, flooring, etc.
Custom Homes - These homes are 100% customizable. The builder constructs the house to your specifications on your land
Once you have your home lined up, you’re going to want to make sure you find the right builder who has experience in creating the style within your plans.
5. Research Land & Neighborhoods
In this step you’ll want to find the piece of land you want your new home to be built upon. Take into consideration where you are in life and how long you see yourself in this home. For example, if you are a family with small children, you might want to purchase land in an area close to the school you want your children to attend. Your Realtor will help you make sure you purchase a piece of land without any deed restrictions that could prevent you from building a new home. Your land purchase will be merged into the construction loan, so that you are not paying a separate loan on land and another on the new construction.
6. Schedule A Design Appointment
After you’ve found the right builder, you’ll schedule a design consultation. Depending on the type of home you’re building (tract home, spec home, custom home), this is the part where you’ll add your design elements.
7. Finalize Your Mortgage and Begin Construction
Once you’re pre-approved for a loan and you’ve chosen a builder, you’ll sign the builder contract to start construction on your home. This contract includes a description of the property, the project’s timeline, cost, payment schedules (if applicable), warranties, and more. Your Realtor will help you understand this contract in detail. After you signed your contract and finalized financing with your Loan Officer and Realtor, building will begin. Woohoo!
