Getting Started Building Your Home
GETTING STARTED
There are three primary steps to beginning the building process:
FINANCING
The first step in the building process is to select a financing institution. Several lenders have what is called a “Construction to Permanent” loan. This loan enables you, the homeowner, to take out the construction loan for your new house. Upon completion of your new home, the construction loan will become your mortgage. The Construction to Permanent loan allows for one set of origination fees and closing costs. In addition, you only pay the interest on the “draws” taken during the construction process. A “draw” is a progress payment submitted to the lending institution by the builder to pay the trades and vendors that have performed any labor or supplied materials up to that point of the construction process. These interest payments are then tax deductible.
The financing institution will “pre-approve” you for an amount that they are comfortable lending you to construct your new home. Each lending institution will have different programs based upon the amount that you will be contributing upon completion of the home. Typically, this is between 0% and 30%. In addition, some lending institutions will require you to put “down” 5% to 10% at the start of the loan.
The important concept to keep in mind during the pre-approval process is what you are comfortable paying per month on your new home. Be sure to communicate this to your lender.
LOT AND HOUSE PLAN
The final two steps go hand in hand. There are several points to keep in mind when selecting your lot and house plan:
- Location: is there a specific school district that you want to be in for your children? Is there a certain distance that you want to be from your work? Do you want to be close to parks, bike trails, grocery stores and other shopping? What type of lot do you prefer; flat, daylight, walk-out, treed, wide, deep, cul-de-sac, major street? What type of neighborhood do you prefer?
Be sure to inquire what the taxes will be based upon the value of your new home!
- In selecting your house plan, you must first decide what type of house you would like to build:
- Ranch: a one level home with all of the living area on one floor.
- One-and-a-half story: a two level home with the Master Bedroom on the main floor and one or more bedrooms on the second floor.
- Two story: a two level home with all of the bedrooms on the second floor
- Once you have decided the type of house that you are interested in, you must next begin your search of various house plans of that type.
- In the consideration of your house plan, do not base your selection on square footage but rather, the room sizes. It is suggested that you measure the sizes of your current rooms so that you have a comparison as you view new house plans.
- Roof styles, exterior finish (brick, stone, siding), front porches and number of garage bays can all be changed once you have selected a plan. Some changes that you want to make will be considered “minor” and can be discussed in the pre-construction meetings. Some changes will be considered “major” and will require the assistance of an architect to make the necessary changes.
- Determine the “setbacks” for the lot that you are considering to make sure that your house will “fit” on the lot. The “setbacks” are the distance from the property lines to the foundation of your house. The front setback is measured from the sidewalk to the front most portion of the house, typically the garage. The side setbacks are self-explanatory. The rear setback is measured from the rear property line to the rear most portion of the house. If you are planning on having a deck constructed on the rear of your house, the setback will be measured to the “footings” or “post pads” for your deck. If you are unable to determine whether the house will fit on the lot, an engineer can “place” the “footprint” of your house on the lot to make this determination for you. The cost associated with this process is usually a few hundred dollars. If it is determined that the house will not fit on the lot, you may decide to choose a different lot, or, decide how to make the house fit. K and V Homes will meet with you to discuss the options you have in adjusting your house so that it will fit on the lot.
Please feel free to contact us with any questions that you may have as you look for a lot or browse through house plans.
Building a new home should be a very enjoyable process. K and V Homes strives to make the process as straightforward as possible by keeping the lines of communication open at all times. We have always emphasized to our customers that they should not be afraid to ask a question regardless of what is concerning. We understand that although we may take some things for granted, our customers may or may not know and thus may need additional information or clarification.
Once you have obtained your financing, selected your house plan, and found a lot, K and V Homes will meet with you to discuss your home. A detailed questionnaire will take you through your house in regards to the interior and exterior finish of your house. Once you have completed this questionnaire, we will have you meet with our cabinet salesman and window salesman. Although you are not finalizing your selections in these areas, you will be able to obtain a preliminary bid for these items based upon your initial selections. During this time, K and V Homes will be meeting with our various trades and vendors to obtain bids on the other items for your house. Upon completion, we will be able to present an initial estimate to you including the allowances for various items. This estimate may fall within your price range or it may be higher than you expected. It will be up to you to decide where to proceed from here. K and V Homes can help you with suggestions to reduce the overall price of the house without diminishing the quality and integrity of the home. Once the price has been agreed upon by both parties, the signed contract, copy of the plans, and specification sheet will be submitted to the lending institution for final approval. Construction will begin on the house as soon as the lending institution grants permission.