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Want to Build Your Dream Home? Here’s What You Should Know First.

By: American Heritage02.28.19
Young Couple Building Home
Have you been trying to buy a new home or vacation property, only to see one house after another get snatched up before you can even make an offer? Or, are you unable to find a house that fits your style or needs? Sometimes, to get what you want, you have to do it yourself. But building a house is no easy feat. Here are five things you should know BEFORE you decide to build your dream home:

1. You’re in Charge – for Better and for Worse

Buying an existing home may mean dealing with an awkward floor plan or settling for hard-to-change landscaping that isn’t your style.

But in a home you build yourself, every element is where it is and how it is because you say so. That can be thrilling, but it can also be stressful. Some choices are difficult: You may want a man cave or an art studio, but you may NEED a nursery instead. And some choices are just mundane: You wouldn’t believe how many different types of doorknobs are out there. Ultimately, you’ll be able to take all the credit when someone compliments your completed home. But you’re also the sole person responsible for making sure your vision comes together correctly.

2. You’ll Want to Choose Your Team Wisely

You will spend months working with the people who build your home, and years living in what they’ve built, so you should take all the time you need to find the right professionals – such as your architect and homebuilder – whose work you love and whose judgement you trust.

Look around for new construction you like and find out who built it. Contact local contractors with good reputations. Review portfolios and ask for references. Then, ask about their experience with similar projects, whether they’re familiar with the materials you have in mind, if they can finish the work within your time frame, and how much they charge.

If something doesn’t feel right, keep looking.

3. Know the Ins and Outs of Local Zoning and Building Codes

Your team should understand local codes and regulations, and so should you.

Zoning regulations will determine what kind of house you can build. These regulations affect things like how tall it can be, whether you can have an in-ground pool, and where you can park.

Building codes determine how and with what materials you can build your house. Their purpose is to ensure homes are safe, livable, and structurally sound. Rules about proper ventilation and minimum room size and ceiling height are governed by building codes.

Failure to understand zoning regulations and building codes can add more time and expense to your project or result in disappointment when you realize you can’t have something you want.

When you have a parcel of land in mind, look up the area’s zoning regulations and building codes and contact local officials to discuss your plans. Your team can help you with this.

4. Have a Detailed Plan and Allow Plenty of Time

The building process will happen quite quickly, but it requires months of advance planning. Because construction costs, the terms of your construction financing, and other factors will force you to build on a fixed time frame, you’ll want to have all your ducks in a row well before breaking ground. Spend plenty of time researching your options – from flooring, to backsplashes, and everything in between – and learn the details of both building and financing your dream home.

Most importantly, make sure you have the time, energy, and cash to support this big endeavor right now. Having young children, a busy career, or limited funds for upfront loan and construction costs are all signs that you may need to wait a few years. That’s OK. When you are ready to build, you’ll be in a better position to get a smooth building process and a home you love.

5. Construction Mortgages Work Differently 

Unless you plan to pay for your project in cash, you’ll need a loan. But a standard mortgage won’t cut it when you need money to both purchase land and fund construction. For this purpose, some lenders offer home construction loans, including a type called a construction-to-permanent loan. This type of loan combines the benefits of short-term and permanent financing to pay for multiple expenses spread out over a period of time.

Starting out, a construction-to-permanent loan is similar to a line of credit. You borrow (and pay interest on) only the amount you need in order to pay your construction team at regular, agreed-upon intervals while your home is being built. Then, at the end of the construction phase (usually the first 9-12 months), the loan converts to a permanent mortgage (like a traditional loan used to purchase an existing home).

This process saves you from having to take out and pay the costs associated with two separate loans (a construction loan and a mortgage loan). You also avoid the risk that a changing market will make a loan harder to get down the road. However, bear in mind that a construction-to-permanent mortgage may require a higher down payment and interest rate.

Not all financial institutions provide construction-to-permanent loans (and of those that do, not all of them make the process user-friendly). But American Heritage isn’t just any financial institution. As a full-service mortgage provider, we can offer you a comprehensive range of solutions, whether you decide to build a new home or buy an existing one. Contact our Mortgage Concierge at 800.808.2662 to learn more.



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