Hellobee

Well, we are officially moved into our new home, and our final appraisal (and check to our builder) should be going through this week. Now that we have wrapped up building our own home, I thought I would share all about the process we went through.

Back in October of last year, Mr. Lion and I decided to change our 10-year plan a bit. We had recently done a substantial renovation of our small ranch home, and planned to stay there for a while. But a combination of factors (a really hot market in our neighborhood, increasing scarcity of property with acreage, and our desire to be foster parents, thus requiring more space) pushed us to call our realtor to determine the current value of our home and whether or not it made sense to go ahead and build sooner. We had always dreamed of building a home, so we were very excited when we found out the value of our home was much higher than we anticipated. After a few days of discussion, we decided to put it on the market.

From there, everything was quite the whirlwind! Since we had been dreaming about this home for many years, the process went ahead fairly quickly. The easiest way for me to share our process is to break it down, step by step.

1) Consider Marriage Counseling – Just kidding. But seriously, before you start this process it is helpful to have a really clear idea of what you want out of this home. There are SO MANY DECISIONS to make when you build from scratch. For the sake of your sanity, it is really helpful to be on the same page from the beginning about what you want, what you don’t want, and who you will defer to if compromise isn’t realistic. For us, Mr. Lion deferred to me for pretty much all style related decisions. I deferred to him for pretty much all appliance and behind the scenes decisions. This division made it much easier. We ran things by each other, but it was really helpful to know who cared more about what, and to trust each other to make some decisions. If we had to deliberate over every little thing we would have gone insane.

2) Research Construction Loans – Construction loans are a little more complicated than a typical mortgage. We went through our local credit union, and they made it pretty easy for us. We went in and told them approximately how much we expected to take out a loan for, and were able to get pre-approved, just like with a typical mortgage. The way a construction loan works (at least at our credit union) is that you submit your plans and a final “turn key” contract with a builder to the bank. An appraiser then reviews the plans and property and gives a value to the home. Closings for construction loans happen before you break ground, and then after a pre-determined period of months (ours was 6 months) the loan automatically converts to a mortgage. As work progresses, the contractor can request an appraiser to come out to the home to assess the work done, and at that time the bank will issue a check to the contractor based on the work that has been completed. These “draws” occur throughout the construction, with the final “draw” being after the entire home is complete. One thing to consider is that our credit union required that we own the land outright to qualify for a construction loan. The value of the land factors into the “down payment,” but if you are building in an area where land is expensive, this could be a barrier.

3) Sell House/Find Temporary Housing/Find Land – For us, these things all happened simultaneously. We had been watching the areas we liked and found a piece of property that we wanted to purchase. In our area, contingent offers are pretty rare, but because we were ready to list our house and we knew it would sell quickly, our offer was accepted. Within a week our house was under contract, and we set closing dates for both the house and land on the same day. This allowed us to use the equity from our home to purchase the land with cash. We found an apartment close by and moved in. We chose an 8-month lease, knowing that we would have a construction loan term of 6 months. For us this was the perfect amount of time, as it took about 3 months to get to breaking ground and about 5 months to build. We moved into our new home 2 days before the end of our apartment lease.

4) Keep Some Savings for the Unexpected – We built our home in a location with a lot of rock, and our builder required a clause in our contract that stated that we would pay out of pocket for any grading costs above their standard amount. We ended up paying an extra $4500 for rock removal. Additionally, we ended up having some trees that prevented our driveway from functioning properly (we couldn’t make the turn to get into our garage), so in the end we paid extra to have our driveway expanded and a few more trees removed. You also may decide you want an upgrade that doesn’t fit within your contract budget. Your builder may require a “change order” to the contract if you want to go over budget, and these come out of pocket as well. You also want to have some extra wiggle room in case of delays. Month to month rent and/or hotels are more expensive than typical rent rates, so you want to have some money there in case you need more time.

5) Find a Builder – We interviewed a few builders, and ended up deciding on a small company who was recommended by a friend. They ended up being great to work with, and I would highly recommend finding a small company if you can. They were able to be very available to us, and were very flexible to work with. One thing to consider when building that is different than purchasing a pre-existing home, is that some builders require an up front payment to get started on construction. In our case, our bank would not loan this to us as part of our construction loan, as they only pay for work that has been completed. Some builders have a strict policy about how much they require (some requiring 10-20% of the total home cost up front!). We were fortunate that the builder we worked with did not require this much up front. Paying for the land as well as a large deposit would have put us out of our price range based on the amount of cash we had on hand to get started.

6) Choose a House Plan – It is helpful to go into this process having a good idea of what your priorities are in a home. Our builder specializes in custom homes, so they were perfectly okay with us coming to them with a plan already. Mr. Lion has been working on the design for our home for about 8 years, so we had already spent a considerable amount of time talking through what we wanted. But, if you haven’t spent almost a decade planning your dream home, that’s okay too. Our builder told us about a time they took a rough sketch on a napkin to his architect, and they were able to turn that into blueprints.  There are so many websites full of house plans you can browse, and it is perfectly reasonable to draw one yourself to get your architect started!

7) Make Selections – You guys, there are a million selections to make. So. Many. Selections. Things you have probably never ever thought about, they will ask you to pick out. We had a pretty good idea of what we wanted, but even then it took a really long time to decide on everything. If you can, get a list of all of the things you will need to select and a detailed budget of how much you have to spend. You may decide (like we did) that some things are worth investing more than average, while with some you may want to spend less. For us, we decided tile, lighting, and carpet were less important to us, but kitchen appliances, hardwood, and a stone fireplace were more important. We were able to move money from one line item to another to make sure we were spending in the places that were priorities for us. This is MUCH easier to do at the beginning rather than as you go. It’s a lot, but having it all done and figured out in the beginning makes the actual build go faster, and it’s much more fun to watch when it all comes together!

8) Visit Often – Throughout the build, it is important to be there as often as possible. Even though our builders were awesome, there will always be things that get overlooked. If caught in time these are pretty easy to correct. For example, we had changed the location of the closet doors in our kids’ rooms so that we had more wall space, but the framers used the older plans. They were able to re-frame them correctly because we caught it in time. You, as the homeowner, are more likely to catch these things than the builder, so having your eyes on the project is invaluable.

9) Prepare for Delays – We were able to move in right on time, but there have been quite a few things that have gotten finished after move in day. There are so many moving pieces when building a home, that having a plan b is important. If our final inspection had not passed (on moving day!) we would have had to have somewhere else to go. We were fairly sure that we could have extended our lease a few weeks as needed, or we would have had to stay in an extended stay hotel for a bit as our last resort. Fortunately it didn’t come to that, but we were definitely sweating it in those last few days!

10) Prepare for Imperfection – Even when you are able to make every single selection yourself, there will be things that don’t turn out exactly the way you hoped. We have very few of these, but they are there. The windows in the kitchen aren’t the size we would have wanted (we didn’t think to check the blueprints for the size of the windows). The color of the front door isn’t exactly what I was expecting. The tile in the master shower isn’t exactly what I was looking for. Because they are all things we selected we can’t expect our builder to change them, and it isn’t important enough to us to pay for them to be changed. BUT overall I love almost everything, and in the end those are all very small things that I can definitely overlook.

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That pretty much sums it up! We are almost completely moved in and are LOVING having a home that is so perfect for our family. If you have built your own home I would love to hear about your experience!