NGKUR: TTMA Building a House

[gabride2010]

H and I have never owned a house before. We are looking at buying a house, but we aren't finding anything we really like in our price range. So now we're exploring the idea of building. We have met with 2 different builders, and we have gotten prices from each.

What are key things to know about building? What are things to absolutely now skimp on and what things can we go cheaper and then fix later? How did you feel about your experience building? Would you do it again? What would you change about the house you built? Anything else i should know?

[ap21ril]

We just built a house last year, closed June 30. I would do it again in a heartbeat. We had the same situation as you- everything in our price range that was already built just wasn't what we were looking for.

We looked at different builders and walked through probably close to 50 models getting ideas of what we liked. We prioritized upgrades by what we wouldn't/couldn't easily change later- 8ft garage door and 4ft garage extension, added a fourth bedroom, fireplace, etc. Once we had those in the budget we went through and added more cosmetic features until we hit our budget maximum. I'd say talk with your DH about features that are musts versus wants, and think about what you're willing and able to change in the future.

The only thing I didn't like about the entire process was selling our old home at the same time. Too stressful! Good luck!

[Deleted]

So not me, but my dad twice.
The one thing that seems to be inevitable is timelines being pushed back. Depending on the time of year and where you live, weather can play a big part in contractors being able to break ground and start work on the foundation and framing.

My dad and stepmom ran into the issue that their old house sold when construction had barely begun on the new house.

I'm tagging nuggetrn - she has recent experience with home building.

[teraiin]

I'm tagging cnf2013 because I think she had a house built recently.

[BurritosAtEveryMeal]

We just built a house last year. Things will get delayed, so don't expect to move in whenever they initially say. Upgrade the things you absolutely can't live without. Think about the layout and how you will use it now and 5 years from now. If I could go back, I'd add a few feet to every room on the first floor and I'd remove two small walls. Id also make thw garage a few feet wider. We didn't want to pay for that when planning but I now see the extra few thousand dollars would have been worth it. Ask for prices of everything up front and don't be afraid to negotiate. We negotiated to have an unfinished bathroom upstairs. DH just finished it himself and we saved about $10,000. Also expect that builders make mistakes. We had a few issues here and there. It's common. Building a house is really fun but also super stressful.

[cnf2013]

Mar 26, 2017 13:47:47 GMT -5 teraiin said:

I'm tagging cnf2013 because I think she had a house built recently.

We just built over the summer. I'll chime in from my laptop after DD goes to bed.

[gabride2010]

Thanks for the input everyone! I'm mostly afraid of picking everything out in the beginning, but then something will happen that will put us over budget. Is that a realistic fear with building or is it pretty much the cost going into it is what it's going to cost?

[obscurereference]

Are you building in a subdivision or on your own lot/property? I think that makes a big difference in the answers to your questions. We built in a subdivision and typically in that situation you will not have large, unforeseen costs come up. If the builder makes a mistake, they will have to eat the cost themselves, not you. That is all built into their margin. MH works for a home builder. Let me know if you have any specific questions!

[cnf2013]

Ok, sorry I didn't get on last night, I got caught up grading until almost 10pm.

We also could not find anything in our budget that fit our needs when we looked. We built, got everything we wanted, and still came in about 9k under budget, so it's doable.

We built over the summer. Our builder also built my parent's new house and they had a positive experience so we went with him because it helped knowing what we were getting into.

I'll echo others, prioritize your needs but also consider what things will be cheaper to do up front that are important, regardless of cost. At the last second we added on a third car garage because we felt it was a necessity and knew it would be more difficult and expensive to add after the fact.

As far as budgeting, let your builder know up front what your budget cap is as well as your non-negotiatble upgrade wants and needs. We had a short list of non negotiables we wanted and he gave us the price for that, which then allowed us to know what we had left for other upgrades.

I will say, we added things throughout the process too and got a bill at the end. We knew this was going to be the case up front and as we could afford small upgrades in cash along the way, we did. It's good and bad, because we had to pay out of pocket, but that's another roughly 4K not thrown onto our mortgage. We also sold our previous house and lived with my parents for five months, so we saved money to afford these things. Plus we made a very sizeable profit, so that helped a lot.

Another thing to consider is what kind of loan you want to do. Some builders will offer incentives for going with a construction loan versus a conventional loan. The caveat is you have to buy the land first and close on that. You cannot get a construction loan without owning the land first. Builders love these loans though because the bank pays them chunks of money over the course of the build so they don't have to front their own money then wait to get it back after closing like with a conventional loan. Our builder provided us with about 5k in free upgrades for using a construction loan, so that is very worth asking about.

Also, don't be afraid to poach subcontractors along the way. We offered the guy who did our shower tile cash and provided the product the have him do our kitchen backsplash. We saved money there by not using our builder as a middle man who requires a cut of the profit. H and I are very handy and have tiled a number of times in the past. We considered doing it ourselves, but our last house was a fixer that we did almost completely just the two of us. Between that and the four month build we just did not have the gusto to do our own work. We felt the additional cost on things that were relatively low cost to begin with (backsplash, for example) was worth our time to not do it ourselves.

Also ask about warranties. We get a few different warranties on our build. And we have a short list of things for our builder to come back over and fix. Minor things, but every time we bump into him he keeps saying "just get your list to me and we'll make everything right." Find out where builders stand on that, because a new house don't mean a perfect house and it's inevitable that some tweaks will need to be made after the fact.

If there's anything else let me know!

[cnf2013]

ETA, my avatar has our half finished house in the background, lol

[achromia]

Mar 26, 2017 21:59:39 GMT -5 obscurereference said:

Are you building in a subdivision or on your own lot/property? I think that makes a big difference in the answers to your questions. We built in a subdivision and typically in that situation you will not have large, unforeseen costs come up. If the builder makes a mistake, they will have to eat the cost themselves, not you. That is all built into their margin. MH works for a home builder. Let me know if you have any specific questions!

I'll second this. We built a house and moved in last May, and it was super easy and straightforward. They stuck to the original timeline. We were able to go visit our under-construction house all the time and ask questions/point out things we wanted them to fix BEFORE they got around to drywall and finishes, so there have been no surprises. The price was agreed upon the day that we signed the contract to build, and the only extras that came up were when we wanted a few upgraded finishes (hardwoods throughout the main floor, thicker padding under the bedroom carpet, etc.). That said, it was with a large builder in a subdivision where they are still selling lots and everything is under construction at once, so their costs are fixed and their subcontractors know exactly what they're doing. I think the situation would be quite different with a custom builder working on a single lot for you.

When choosing a design/floorplan, whether you are starting from scratch or just picking from existing floorplans that a builder offers, prioritize the things that you cannot easily change down the line, as PP have mentioned. For example, for about the same cost, we had the option to finish a chunk of our basement during initial construction, or add a jack-and-jill bath between two of the bedrooms. Doing the bathroom now and saving the basement for later was an easy choice.

And don't be afraid to shop around! If you have a list of your must-haves for the house, take it with you to look at models, check them against your list and make sure you get the essentials. New homes, and especially model homes, are beautiful to look at but you will be SO annoyed if you build a brand new house and it's missing some of the things you want most. I think we looked at 20 or 30 models before finding the perfect one, and we had to drive an hour and a half to a different neighborhood to see it in person. Worth it!!

[gabride2010]

****** The builder would give us an itemized bid, so we would know where we can save and where we can splurge. I'm not sure if he would do a set price. I don't think so, but it is definitely worth asking about.

It seems like we are in a similar situation like y'all were cnf2013. Good tips on budgeting, loans, and warranties.

obscurereference It is technically a subdivision, but it is a very small one, and all of the lots are 6.5+ acres. The builder lives in the subdivision, although he does not own the property. He also built another house in the subdivision.

achromia We are looking at house plans online, but H is customizing them. The builder is ok with this, and we do not have to choose between his preset plans.

Do y'all mind sharing the kind of loans y'all got, and the percentage you had to put down at closing (I do not want specific money amounts!)? That's a bit concerning at the moment. H and I are going to call the loan lady at the bank tomorrow to ask what our options are.

[cnf2013]

Like I said, we did a construction loan so we bought our land first. It was 52k for the lot which acted as our down payment since builders typically include the cost of the lots in house base prices. That put us around 22% down I believe. The bank came out periodically to inspect our build and cut draws of money for the builder. When the house was done the loan automatically converted to conventional for us to start paying on. We used a mortgage broker and opted for a company that does bi-monthly (I think?) payments, so we actually pay a smaller payment twice a month. We have a 30 year mortgage that will be paid off in 25 years this way. The only down side is rates are a smidgen higher. I think our interest rate is like 3.7 as opposed to the 3.3 we could have gotten for going conventional. But having it paid off five years sooner negates the difference in monetary amount over the life of the loan, so we were okay with it.

Our only closing was on our land/lot and since the closing costs were percentage based we saved money there. Obviously the land was a lot cheaper than the house.

[obscurereference]

We did a conventional loan with the standard 20% down. So how ours worked was we put a fixed amount down when we decided we wanted to build and which lot. I think $10k. Then when we went through the builder's design center we had to put a percent down based on our finish choices, but this number could be really small if you just stick with basic finishes. That's all we paid until we closed and then the money that we had already paid in deposits got converted to our down payment so we paid 20%-deposits at closing. The builder we used, and as far as I know every other builder in our area, fronts the costs until closing. We had also sold our precious house and were renting short term at the time so we didn't have any money tied up in a house. Good luck!

ETA: previous, not precious house 😂

[goldenlove3]

Hi I haven't posted here in a long time but we're in the very early stages of building. We are in the process of buying a lot and will be building next year after saving up some money.

We are going with a lot loan and putting 10% down on that. When we're ready to build, we'll be getting a construction loan and the lot loan becomes a down payment on that. After construction is complete, the whole thing becomes a 30 year mortgage. We were told that the construction loan is a set cost. If we go over with upgrades, that needs to be paid cash. That's why we're saving up for a year first.

Before we started the process, I met with my uncle who is a builder to find out if there was anything that we should look into first. He said utilities are a big one. If you're not part of a new subdivision build, find out about electric, sewer, gas and water. For example, if the utility company has to borrow under the street to make the connection, it could add a big chunk of money you weren't expecting. Go to the city and find out where everything is and talk to them about connection costs.

I'll be watching this threads for all the tips!

[gabride2010]

We would be doing something very similar to y'all cnf2013. We would buy the lot in cash (about 60-65k), which will act as our down payment, and we won't have to put down any more money for the house. After we finish building, then the loan will automatically convert to a conventional loan. I will have to look into the more frequent payments. We will likely pay more than our payment every time to help pay the loan off early. We will have to check to see which would pay off earlier.

Thanks obscurereference! Our builder doesn't have a design center, so we don't have anything to go off of like that. We don't have a house to sell, so that is one benefit to being a first time home buyer. I think we would end up paying a bit more than 20% since we will be buying the land in cash. Maybe more like 25%, but it just depends on how much the build costs.

Hi goldenlove3! Good to see you again! I've been thinking about buying the lot this year and building next year, but I'm so sick of renting. We could save quite a bit of money in that year though, which would be less on the mortgage in the end. I think it will help us decide when we get an itemized bid from the builder. H is finalizing the floor plan (he draws them for fun), and then we will submit it for an itemized bid. That is good advice to look at the utilities. I know we will need a well and a septic system. The gas line is at the lot already. The electric is out there too, so we would just have to pay for hookup for both of those.

[cnf2013]

The total cost of your build will really depend on how much you end up getting in upgrades. We paid for more than we originally intended when going in, but we feel like all our upgrades have been worthwhile and we still came in under budget, so it ended up being fine.

Good luck! Have fun and keep us up dated!

[gabride2010]

Very true cnf2013.

I just keep thinking about all the houses we've seen and how none of them compare to building, plus building would be cheaper. We're taking some more time to make sure that building is definitely what we want to do.