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XP: a few questions about building your home
We are most likely going to purchase land and build our own house. We are not sure yet whether we will go with a builder or if we will buy a modular home. We can see the benefits (MM and otherwise) of both. We are just starting the process but will do much research before jumping in.
Anyone want to educate me on loans for land and new construction? I know that some builders will take out the loan or pay for the house themselves and then you take over the mortgage when it is finished. I think there are also other ways of doing it and would love to understand our options.
My dad is going to be our GC. Since we aren't the best decision makers and want everything to run as smoothly as possible, how should we go about budgeting for everything inside? Just go start pricing things out? I would love to have things chosen far in advance so we aren't doing things on the fly, though I know that some of it will be that way.
What do you wish you did differently? We'll take suggestions of any kind (for example: "I wish we didn't go with a modular." OR "I wish we put a light over our sink"
I'm sure I'll have more rambling along the way. Thanks in advance!!
Re: XP: a few questions about building your home
Since you are just starting out, I will focus on the land size of things. Make sure you know what you are purchasing! I am not sure how versed you are in land development, so I apologize if you already know this, but you need to make sure you are purchasing a buildable lot which will includes getting a soils test and perc test. Are there existing easements on the property that limit where you can build? Also account for development costs - what utilities will need to be run to the site, it is public water and natural gas or will you need to dig a well and septic field, and have a propane or oil tank? Is there significant grading that we need to be done? Will you need to bring in or remove dirt? All these thnigs can be very costly, so make sure you do your homework before you purchase the lot.
Re: the loan side, it really depends on the builder. If you are having your dad build it, you would need to take out a construction loan, that you can draw from after periodic inspections from the lender, and then refinance into a permanent loan when the house is complete. You will need to have detailed construction drawings and a budget in order to do that. Does your father have experience as a GC? The bank will likely want to know that, because of the risk involved.
Hope this helps! Feel free to post more questions, and I will try to help with what I can.
Obviously you all have to decide what route you want to go. There is a pretty big difference IMO between the two routes you are considering.
When building a home there are two paths: custom construction (which means you design the layout of the home and make decisions on allowances) or you select a floor plan provided by the builder (which usually will help you keep costs in line but you lose the ability to design what you want). The latter option is probably similar to a modular home I suppose.
You can purchase land on your own or you can purchase it with your builder. Again, knowing exactly what you want to do in terms of modular or building is important. Many lots of land in desirable areas and developments are owned by builders and they will not sell to you unless you are building with them. Some builders would prefer to be a part of the land selection process as well.
As the PP noted, if you buy land on your own you should be educated on how that process works. The first piece of land we wanted was not with our builder but he walked us through the process and our land attorney arranged review of all the records and helped us get the land surveyed and soil tested. That land fell through because of the soil report (this is important) - in that case there was too much expansive soil and that would have resulted in about 10-15K additional fees to get the land ready. The land we ended up going with was with our builder and he guarantees the land so no additional fees/testing for us.
Construction loans are becoming harder to get - many banks have gotten out of the business of providing them. However, many builders have relationships with banks that still do offer construction loans. So that's important to discover.
Different builders and situations may work differently. In our case, we drafted the architecture plans (custom construction), the specs/material sheet (which details the materials aka quality and cost allowances) and the contract. The bank reviewed these items (after they approved us for $x loan) and had a planned-appraisal performed. Many appraisals on new construction are soft right now but we were lucky in that we appraised for 100% of cost (though now that we are 50% through the process we have added some upgrades so we might not appraise out in the end).
Once the appraisal was done the bank approved the plan for the amount. Our builder has arranged with the bank X amount of draws of money. Their first draw came after foundation and framing were done and inspected. That is when we began paying on the loan (only paying on the amount drawn not the total loan amount) + a smaller amount which would build up by the end of the build to be our 10% down.
When the home is finished being built there will be an as-built appraisal (we expect we may have to pay some money out of pocket if the as-built doesn't appraise fully especially since we upgraded after the project started). The construction loan will then be rolled into a traditional mortgage. In theory, at that point we could shop around to other banks for better rates.
Most builders are all inclusive. I am going to guess that they will not work with you or 'your' GC. As that is their job - they have their own crew and their own process. They would probably charge you a fee to have your own GC - because chances are that person would do nothing but be in their way.
If you want your dad to be your GC - then you should just have him be your builder and higher all of the individual experts (foundation pourers, framers, etc). I think in the end you will be mighty sad you did that especially if your father does not have experience building quality homes.
Never do business with family. You have no place to complain if they screw you and you remove legal protections (probably in that you might not want to sue your father).
But again - I don't know your situation but most professional builders/firms will not work with you bringing some stranger into their firm and saying 'this is my GC' .. lol
A lot of questions you are asking would be answered for you if you interviewed and sat down with builders known in your area. You would see why your dad as a GC is not needed. You would find out what you get for the budget you have. You would understand what that means in terms of allowances for things like flooring, trim/moldings, appliances, and so forth.
The question about 'choosing things far out so you aren't doing it on the fly' doesn't make sense to me in the building process. A professional builder is going to have a schedule for you to follow - this schedule makes sure that you pick things at the proper times. They will either have an on-site show room for you to pick everything from within your allowance budget or they will give you a list of vendors they work with for the various items. It isn't like going to lowes and picking things out (though I guess if you built on your own without a professional builder that might be the case).
The questions about what we wish we would have done would be irrelevant to your situation. You have a lot more work to go before getting to that point.
Good luck to you!