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Process for building a home
We have the land. We have money for a down payment. We are pretty sure we can swing monthly payments starting next year after some costs we have now have gone down.
So the questions running through my mind now are...
Do we get a construction loan?
Do we take a house plan to the bank and they loan us $$ based on the cost to build?
... or do we see how much of a loan we can get and choose a house plan based on that?
And how do we know how much it is going to cost to build a particular house going from a house plan?
Is the internet the best place to find house plans? (Apparently you have to pay to see estimated cost to build...?)
If we want to combine different parts of different house plans that we like, who "puts it all together?" An architect or the contractor?
I've heard of some people in our area just drawing out what they want and letting a contractor go from that. I do NOT feel qualified for such!
I guess my main concerns now are just where do we begin when it is time... the bank? House plan/architect/etc.? And what details entail those things?
Re: Process for building a home
DH and I built a home for our first home. It wasn't a custom home like what you are describing, but a preset design selected by a builder. Anyway, I wanted to share that it is exceptionally easy to spend a ton of money building a home - the costs of the extras add up quickly.
To figure out "how much house" you can afford, you need to take a look at your income and finances first. Only you two can decide how much you can afford - don't rely on the bank or the contractor/builder to tell you or to guess for you.
First, determine if you want to run the cost of the home using two incomes or one. If one of you plans on being a stay at home parent in the future, it may be wise to budget your new build off of one income only.
Once you know this, determine the after tax amount of income you will have.
From there, your monthly housing cost (including principal, interest, taxes, insurance and major utilities, like gas, water, sewer, electric), should be no more than 25-28% if you live in low or a mid cost of living area and 30% if you live in a high cost of living area.
Using these percentages will help you from being house or mortgage poor.
For example, if your after tax income is $60k annually...
25% = a monthly housing expense of no more than $1,250.
28% = a cost of no more than $1,400.
30% = a cost of no more than $1,500.
Remember, these dollar amounts are monthly and supposed to include the mortgage payment, taxes, insurance, and also major utilities.
Get online and find a mortgage calculator that can use these monthly payment amounts and from there you can determine how much of a loan you would need to fall into this payment range.
The budget is the first place to start because it will also help you keep costs in perspective AND it will help you determine which sort of builder/contractor to use, as some probably only deal in certain price ranges.
To find your builder, try looking up websites for ones in your area or visit a neighborhood that has custom builds in it and talk to the homeowners...people love to chat and share opinions.
Lastly, I would make a list of 10 things that you call your "must haves." And from that narrow it to five and then to three, just in case you need to ax somethings along the way to stay within budget. By knowing your true priorities ahead of time you can save wonder and time.
Lastly, when building, try and consider resale ease just in case you did have to put this home on the market if some life change occurred and you had to relocate. I'm not suggesting to give up your true desires, but to at least a little bit think of a future, prospective buyer and what may be appealing to the "general population."