Get ready to build a house with these five tips


new home construction.

Building your dream home can be both exciting and nerve racking! Following these five simple steps can help ensure a seamless process and positive experience in the construction of your new house.  

 

Tip 1: Create a Budget

It is important to crunch some numbers before choosing a home design so that you know the budget range that you need to stay within. The numbers can add up quickly when you include the costs of site prep, property taxes, construction, and potential upgrades. Adding a contingency fund for unexpected expenses is encouraged by most builders, and many experts recommend padding your expenses by 10% to avoid any shortfalls. Some financial institutions offer free Home Affordability calculator tools to determine lending ratios and monthly payment estimates. Community First Credit Union is a great resource when you need some sound financial advice. 
 

Tip 2: Research builders

Once you determine what you can afford, you are ready to find a builder. Visit the website of your local home builders association for a list of builders. Home Builders Association of the Fox Cities website provides consumers with a directory of its members; this online resource is extremely helpful when looking to hire a professional for your home building, remodeling, and financing needs,” said Heidi Zich, CEO of HBA Fox Cities.  Attend a Parade of Homes event to view recently-built homes. “Our Parade of Homes events are an excellent way for consumers to casually interview builders and see the style and quality of their work,” said Zich. When you find a few builders that you like, you can schedule a time to meet with them, review their floor plans, and ask for references. 

 

Tip 3: Think about resale value

Your builder can help you find a home design that meets your budget and timeline, but remember that you may not be in that house forever. In the future, you may decide to downsize, upsize or move because of various reasons. At the same time that you are building a home for you to love, it is important to keep in mind the resale value when designing your home.


Some things to consider:

  • Research price of homes in the area you are building – this can affect the resale price
  • Choose upgrades that increase the value of the home, or would be difficult or more expensive to upgrade after the build - like appliances, window quality, cabinet quality, landscaping, and a security system.
  • Add your personality in ways that can be easily changed by the next owner, such as paint, decor, carpeting, and light fixtures.
  • Location, location, location!  Whether your home is located near convenient amenities, job opportunities, well-maintained neighborhoods and/or scenic views will all make a difference in the value of your home and property.    

Tip 4: Determine financing options

Construction loans are a bit different than traditional loans since the lender disburses funds to the builder in the form of ‘draws’ as specific phases of the project are completed, for things like foundation, framing and finishing work. The amount of payment is based on the work completed. These loans typically cover the cost of plans, permits, fees, labor and materials, closing costs and contingency reserves. Once the construction is complete, the loan must be paid off or transition to a permanent mortgage. Some financial institutions like Community First Credit Union offer one-step construction loans with a one-time loan application, approval, processing and loan closing with no need to refinance. Community First Mortgage Loan Originator Cindy Nadke recommends identifying alternative housing during the construction of your new house.“If you need to use the equity in your home for the down payment, you will need to be prepared to sell your current home prior to the loan closing,” she explained. 
 
After completing your analysis, you may decide that remodeling your current home is a better option than building a new one. Some financing options include a home equity fixed rate loan with a locked in rate, or a home equity line of credit (HELOC) loan with access to funds for up to ten years. “If you are not sure which option is right for you, our mortgage lending team is always here to help walk you through the various alternatives,” said Nadke.

 

Tip 5: Create a plan

Although it is last on this list, the importance of this step cannot be overstated! From the initial design phase to the final punch list, a detailed plan will help prevent delays and avoid costly errors. If you have trouble making decisions about finishes or fixtures, use online resources like Pinterest for inspiration, consider hiring an interior designer, or attend the Fox Cities Parade of Homes to view samples of various options. Remember that time is money during new construction, so delayed decisions could lead to longer lead times and greater expense. Having a plan will help you make more prepared decisions and avoid delayed timelines.

CFCU member-owner, Amanda said “we budgeted at the highest cost for key expenses like the foundation and fill. That helped us to avoid unexpected overruns, and when those costs came in lower, gave us the opportunity to include some things from our wish list.” Most of all, be sure to communicate often with your new home construction team. Don’t assume anything, and always clarify if you do not understand a particular step, process or situation. “My best advice is to choose a team you can trust, be a partner in the process, plan for different scenarios, put your money into things that are not easily changed, and find places to save money on things you can change later, like faucets or paint.  And, don’t forget to enjoy the journey.” said Amanda.   


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