So you’re ready to build a dream home. Whether you’re a young family looking for room to grow or empty nesters looking for a retirement oasis, you deserve a home that is everything you want. To get that, it helps to be an educated consumer.
From finances to finishing details, there are important things to know before the building process begins. Building a custom home can be one of the most exciting times of your life, but it can also be a frustrating experience if you’re unprepared or uninformed, or if you choose the wrong builder. Here are five pieces of advice to keep in mind if you’re planning to build a custom home.
1. Set a budget in advance
Approaching a project without a budget is a slippery slope. With custom homes, the upgrade possibilities are almost endless. You might make one upgrade here and another there, and before you know it you’ve added $100,000 to the project.
It’s always a good to set a rough budget before you start planning. Give yourself a range, but know your maximum. It also helps to prioritize your wish list. If something has to give, what will it be? Can you give up the gourmet range? Can you live for a few years with an unfinished basement?
2. Understand construction financing
Unless you have a ton of cash in the bank, you’ll have to fund your dream home with a loan. New home financing is a little trickier than existing home financing because there are more options. There temporary construction loans that convert into permanent mortgages and those that don’t, in which case you’ll have to secure a separate mortgage loan after construction is complete and pay two sets of closing costs. Research your options in advance to figure out what makes the most sense for you.
Keep in mind that construction loans are not as readily available as they once were, particularly because they’re considered riskier than existing home loans. You’ll be able to get a loan if you have good credit, but expect to put 20 percent down.
3. Choose your contractor wisely
How often have you heard construction horror stories? We all know that choosing a reputable builder or design-build firm is important, but people still forget to invest time into researching the company’s background. Always ask for references - and check them. Check the company’s rating with the Better Business Bureau. Find out how long the company has been in business, and make sure they are licensed and insured.
4. Ask questions - and lots of them
When you’re working with a custom builder, communication is key to making sure the home that is built meets your expectations. A reputable builder will keep you informed at every step in the process, but never assume you know everything. Not sure if you’ve designated enough storage space? Ask to review the plans and discuss your options. Worried that the countertops you chose might clash with the cabinets? Ask the designer or builder for a second opinion. The last thing you want is regret not speaking up.
5. Stay involved
Along the same lines, the more involved you are throughout the design and building process, the happier you will be with the end result. When you’re building a custom home, chances are this is a place you plan to call home for a long time. Participate in the planning of the layout and the selection of materials and finishings. Any reputable contractor or design-build firm will appreciate - and seek - your input.