When it's time to move, there are many reasons to consider home construction over purchasing an existing house. One is getting everything that you want! At the time of writing this article, Housing Inventory in Meridian Idaho is very low and there are not a lot of good options to choose from. By building your home, you'll get all-new everything, so you won't be buying into someone else's problem plumbing, heating, or deteriorating roof. You will have input into the design to create your dream house instead of having to compromise with a floor plan that is almost what you want. Plus, everything will be done, so there won't be any remodeling or upgrading to do once you move in. While real estate construction can be the best solution for many people, it's not a walk in the park. There will be concerns throughout the project, from breaking ground through the final walk-through before you move in. If you build a custom home and are allowed to make all the interior finish decisions you and your spouse will have hundreds of decisions to make. Sometimes that is stressful and sometimes can be contentious if you don’t agree well on things. Find out all you can about the home construction in the area, especially locations and developments and their different amenities before you even start looking at floor plans, so you know what to expect.
Buying Land for Real Estate Construction
If you're seeking the perfect house on acreage outside the city limits, home construction is a good choice for you. It frees you up to look for the right piece of land and build the house to your specifications. You'll need to look into the local regulations on home construction, however, to ensure you won't be restricted on land use or the size of home you want to build. Find out if power and natural gas are available on the property. According to Building Advisor, you may have to pay by the foot to have utilities brought to the site if existing lines are a long distance away. You'll also want to know about water rights and whether the land already has a well and septic system or if you'll need to install them before building your home. On the other hand, if you're buying a lot in a development, the developer typically takes care of those issues and will be able to fill you in on what's done and what isn't. Be a smart buyer, though, and don't assume anything. Always ask the developer what things are included in the cost of your lot and get it all in writing, so there are no surprises later. Of course having your own Realtor that is experienced in Meridian to represent you and help you review your contracts with the builder as you go down this road is the optimum situation!
Finding a Contractor
When building your home, it's important to work with a contractor who is reputable and that you're comfortable with, so it's equally as important to shop around instead of selecting one randomly. Find out which real estate construction contractors build the new homes you really love. A Realtor who specializes in build jobs and has worked with a number of builders in the past can be a great resource for recommendations. They can also help get you more reasonable pricing in some cases. Also, if friends or family have recent experience with home construction, ask them who built their houses and whether they would work with them again. Make a short list of contractors you're considering and contact the Idaho Bureau of Occupational Licenses to find out if complaints or grievances have been filed against them.
Choose a Floor Plan, Estimate the Costs
House Designers advises that you keep things simple when choosing a floor plan and deciding on upgrades if the house you're building won't be the last home you own. Designing and building your home with features that would appeal to a widespread buyer’s base will help with resale down the road.
Your contractor may have a selection of house plans you can choose from but, if you have a very specific and unique floor plan in mind, you'll probably want to work with an architect to draft the blueprints to your specifications. An architect will know about the trends in home construction and design and can offer advice on technical issues, although FreshHome points out that you know your family and your needs best, and advises against letting anyone including an architect or the builder tell you what you do or don't need. Alternatively, you may find home design software more affordable, even if you only use it once, and the program won't exert its taste and preferences on your floor plan.
Once you have the plans, then you can begin estimating the costs. The Nest recommends working closely with your contractor to get a realistic idea of what your new house will cost. If you've included all the "wants" from your wish list along with all the "needs," you might have to make some compromises to make the total cost fit your budget. According to Good Financial Cents doing some of the work yourself is one way to afford a few more of those "wants," but only if you truly have the skills to do a quality job. Otherwise, you'll spend more money in the end to have a professional fix your mistakes. If you have the skills, though, saving money on the labor to paint the walls, tile the bathroom, or install kitchen cabinets can free up funds to pay for some of the high-end amenities you have your heart set on.
One more thing: real estate construction rarely goes off without a hitch. It's a good idea to pad the estimated costs by 25 percent to cover unforeseen issues like increased material costs or the extra expenses that can arise if the weather doesn't cooperate with your construction project.
Get a Home Construction Loan
If you have cash on hand, a mortgage won't be an issue. However, if you'll need a loan for building your home, you should pre-qualify for a home construction loan early on. This step can be taken care of any time, but once you have the land, builder, and floor plans, and have estimated the costs for building your home, nothing can go forward until you have the financing lined up. Bankrate says that lenders view home construction loans as a little risky, so you could have a hard time getting a loan for more than 80 percent of the value of the home. If you own the land you'll be building on, though, it can be considered as equity and can count toward the 20 percent you would otherwise have to come up with.
A construction loan has two phases: home construction, when you're building your home, and completion, after the house is built. During the building phase of real estate construction, the loan will be considered short-term, giving you about a year to complete your house. The interest rate will likely be variable and higher than a permanent home loan, and the interest is all that is typically paid during the building phase. The loan proceeds are usually put into an account, and a schedule is determined so that the contractor can receive payments at regular stages of the home construction. The lender keeps tabs on the progress to ensure the house is coming along as scheduled and the funds are being spent as agreed.
After the home is completed, if you've made arrangements with your lender for a construction-to-permanent loan, the financing will get converted to a standard mortgage with a locked interest rate. The nice thing about a real estate construction-to-permanent loan is that you'll only pay closing costs once, instead of for the construction loan and again for the permanent mortgage.
As previously mentioned, even the best-planned home construction typically has its share of problems. The weather can interfere with the progress--it's not a good idea to pour concrete in the rain or if temperatures will drop below freezing in the next couple of days--which can cause delays, as can an issue with material availability. There are ways to deal with predicaments like those, such as using chemicals to stabilize the concrete in adverse weather, or buying alternate, more expensive materials. Both solutions cost money, and that's why it's wise to account for extra in your cost estimates, but you should also add in additional time to the timeline to ensure you stay on schedule and meet the milestones the lender will want to see. You won't be caught off guard or short on funds if you plan ahead for worst-case scenarios. You'll be that much ahead of the game if your home construction finishes under budget and ahead of schedule.
Another thing to plan ahead for when building your home is that there still may be work to do once you reach the final phase. A punch list will be created to itemize the things that still need to be done, such as replacing any glass window panes that are cracked, touching up the paint over thin spots, installing closet rods, or hooking up the microwave exhaust in the kitchen. This is one of those issues where it's useful to have a real estate agent on your side because he can go through the house with an unbiased eye to spot and make note of flaws. Sometimes, the flaws are minor and won't affect the quality of your home, but there are usually some items on the punch list that will affect the quality. Even if the home is completed enough to obtain a certificate of occupancy, money from the construction loan should be put into an escrow earmarked for completing the items on the punch list.
Give Stewart Realty a call if you're considering home construction in Idaho. Jeff Stewart and his team can help you with every step along the way when building your home, from buying the land to finding a contractor to negotiating a construction loan. Jeff is not only a Realtor and Broker, but he has also worked in real estate construction and as an appraiser. His extensive experience gives Stewart Realty clients an advantage other Realtors can't offer when it comes time to do walk-throughs and complete punch lists. To find out more about home construction in Meridian or the rest of Southwestern Idaho, give Jeff Stewart at Stewart Realty a call for a personal tour of the area and some great advice on building your home to fit your style and budget.
Jeff Stewart, Broker/Owner, Stewart Realty, LLC,
Direct: 208-602-1993, Office: 208-887-5445