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What is the process if I would like to build a house?

There are plenty of lots around our desire area.  The homes are a bit pricey but I thought that maybe if we built a house instead of buying one already there could be cheaper.  My husband has some construction experience but the reality is that I don't even know where to start.  Do we buy the lot that we want and then talk to a bank about building? how is the construction financed?  Any help will be greatly appreciate it.
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July 16 2013 - Springfield
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Profile picture for SoCal_Engr

Costs for a custom build can vary wildly, depending on your tastes...and how often you change your mind (change orders are simply blank checks for the builder).

As to costs, this site can provide some guidance. It's nice, because it lets you play with shapes and finish levels, is adapted to your locale, and gives you a nice price breakout at the end.

Step #1 is to get a feel for the process. Do some research, talk to a bank about requirements for a construction-to-perm loan. Have a heart-to-heart and discuss what are "musts" vice "nice to haves". Get a feel for where property is available, what restrictions may be placed on any new construction, and what is needed to get the lots "construction ready".

If you decide to move forward with a custom build, we found that finding a good architect is huge. A good, local architect is familiar with local codes, and often has insight into local construction issues (e.g., soil issues, access, etc.). Ours was also extremely helpful in dealing with bids, g/c's, etc.

You'll also want to find a lender (person, not institution) who is familiar with construction and funds management. Ours was huge.

As you may gather, there's a lot more. Is the lot "build ready"? Utilities? Access? Custom plans? Stock plans and adapt to lot? Size? Finish? Code requirements? HOA and/or covenants? It's not impossible, but there are a lot of boxes to check.

Good luck.

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July 16 2013
Profile picture for user540936389
Building a home could be the most costly mistake you can make if you hire the wrong contractor.
The first task is to hire a lawyer! Remember, the contract you sign is made for contractors, by the contractors lawyer.
There are so many hidden charges and clauses  in these contracts,it woud take hours to explain. You need a Lawyer!

It is very important that you understand what is not included in the contract.that could be an unexpected cost such as:

Well ans Septic

Additional Fill Dirt

Driveway Concrete

Electric Connection

Lighting Fixes

These are just a few of the items you should research and make allowance for.
Lastly, buy a camera and start a journal. (keep a record of all events, conversations, transactions and visits to the construction site.)
Most small contractors don't want you to visit the site They don't want you to see (if any) The construction mistakes and shortcuts.
If you would like to see some construction mistakes before they were covered up you can reply to this post.

I hope you choose the right contractor!

Good Luck!
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July 16 2013
Building a home is not necessarily cheaper than buying an existing home.  It all depends on the amount of money you have for the investment.  I suggest that you meet with a few lenders who do construction loans, and then likewise meet with a few builders to see if they offer "turn key" or "construction loans.  Having a buyer agent with construction experience on your side will also help you.  Good luck!
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July 16 2013
It depends on the price of the lot. You can get financing on the lot and the home or just lot if it is over $50k. If on lot and house than your house loan is interest only and then you refinance. You must finish the house usually with-in 12 months. If you need a loan referral nationwide, let me know. It is usually more expensive as the details get you. And because of the cost restrictions you don't always get what you want. If you are getting a loan, your husband cannot do any work on the house before is finished and you refinance.
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July 16 2013
Everything takes money - money to buy the lot and money to build or money just to buy something already built! So, first, I'd suggest you talk with your loan officer OR check your bank account to see what you have to work with. Then if needed, your loan officer can tell you how much you can borrow - maybe get a construction loan...your loan officer can give you more details.

There's also professionally licensed builder/developers with a limited selection of house plans, site plans, elevation plans, etc. you can choose and customize from the details of picking where to install a switch or outlet, as well as your preferred cabinets, appliances, paint colors and window/door access, etc. If you need a buyer agent to walk this entire process with you, I'd be happy to help!
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July 16 2013
Profile picture for wetdawgs
"I thought that maybe if we built a house instead of buying one already there could be cheaper."    Often it is just the opposite.

Do serious research into the costs of purchase of land and costs of building before jumping into this endeavor



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July 16 2013
Buy Dirt, get bids, build. 
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July 16 2013
 
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