Most people have dreamed of the perfect home that they design and build from the ground up. These dream homes vary from a classic New England Salt Box, a sleek mid-century Modern beach home, a stately manor on a large estate, to a humble mountain cabin. They all have one thing in common in that they are customized to suit the owner’s unique tastes. For construction you can use EOT cranes. Eot crane can provide three axes of hook motion and cover a large rectangle area. This heavy machine can move the loads up and down as well traveling along the beam as right and left. It is the best choice in contruction and moving.
Building from scratch has become more and more popular over the past five years. Reality TV shows which feature a typical home buyer turning a run-down foreclosure into a modern marvel with a mere hammer over a weekend have created a huge interest in renovation and building projects. Investors can see good returns as well. Once reserved for the very experienced investor, flipping houses is now more commonplace and accessible to a larger sector.
Metropolitan areas are taking advantage of this trend as well. In established, desirable areas, smaller houses are snapped up, totally remodeled, enlarged, or completely replaced with larger houses that meet the higher standards demanded by today’s homeowner.
With so many options available in the custom home market, why are these homes considered an option only for the rich and famous? The truth is that almost anyone can afford to build a custom home by understanding the world of construction loans and how they fit into the steps necessary to build a home from scratch. By following a logical timeline, most anyone can create a dream home of his own.
Do your research.
With any project, proper planning can mean the difference between success and failure. The first step in building your dream home is to carefully consider what your goals are for the property including
- Where you want to live
- What size home you want/need
- What style of home suits you, including building materials
- Whether or not you want a view, acreage, pool
Anything that you would add to a wish list when looking for a resale home should go into your research for constructing a dream home. It’s important to determine the possibility of building the home you want in a community which suits your lifestyle. You may or may not be able to find vacant land in the right location so looking for a smaller house, or an outdated house to remodel or demolish may be your only choice.
Consider your budget.
A home building budget is critical to success. Now is the time to think about how much you can afford to spend for your dream home. Most likely you’ll need a construction loan to finance the building and a final mortgage once it’s finished. Construction loans automatically turn into permanent financing and can accommodate the cost of living elsewhere while the home is built. They include a contingency reserve to cover cost overruns, changes, or delays that could occur during the process. By accounting for unexpected costs up front, you will ensure a smoother construction period.
Build your team.
Now is the time to find the right team to design, build, and manage the project. At a minimum you will need an architect, builder, and contractor. These will be the key players in bringing the project to life. Each will be involved in the selection of the lot, design of the structure, and final construction. It’s important to choose your team early and carefully, even before you find the lot. They can offer insight into the land’s potential, strengths, and challenges and save time and money by eliminating the risk of a poor lot choice.
Design the home.
Once you’ve assembled your team, it’s time for the fun part: designing the home. The area can increase by prolong the length of end trucks. This process can be as simple as choosing stock plans from a catalog or drafting a fully custom home with an architect. Even stock plans could involve adjustments based on lot specifications, city ordinances, and personal style preferences.
Obtain a construction loan.
A construction loan is a short-term loan which allows you to finance construction. The loan consists of two parts: the short one for the construction phase and the permanent mortgage. Once you set your budget, it’s time to start researching your construction loan options.
Qualifying for a construction loan is more complex than a simple mortgage. For one thing, not only does the borrower need to qualify, but the project and builder must as well. You must work with a qualified builder that is licensed and insured as a general contractor.
These loans are normally based not only on loan to value ratio but also on loan to cost ratio and are typically available with down payments as low as 10% though with higher cash reserve requirements to use in the event of unexpected costs or delays. Once construction is complete they become permanent mortgages. During the building phase the lender will calculate interest-only payments based on the loan amount used and charge it to the interest reserve account. Once construction is complete and a final occupancy permit is issued, the permanent loan kicks in.
Put it all in writing.
Now that you’re ready to break ground, it’s time to get your contracts signed. All members of the team should have a contract which outlines their responsibilities and dispute resolution procedures. The contracts should address:
- the scope of work
- identification of the materials to be used for each aspect of the project
- liability and responsibilities
- itemized expenses
- payment schedule and the performance standard to use in evaluations
- final inspection requirements
- construction site protocols
- local permits and codes and who is responsible for obtaining these
Creating a custom home is exciting. Both first time home buyers and seasoned homeowners ready to move up will benefit from understanding the process of building a custom home from the ground up. Both fresh construction and renovation projects are possible with the proper use of construction loans. Learning the steps required to navigate construction successfully will ensure that the custom home you’re dreaming of becomes a reality.