Building a Home? Make Sure You’re Covered
with this Home Building Checklist
The decision to build the home of your dreams is an exciting one. But, it’s important to know just how many steps – and costs – can be associated with the entire process. Thankfully, the right team can help you navigate the journey to make sure you’re on track to get into the home that you’ve always dreamed of. You’ve already taken the first step by setting the goal of building your home, now it’s a matter of taking the right steps to get you there. Follow our home building checklist below to make sure there are no surprises on your path to making your dream a reality.
Make Your Plan
Once you’ve decided to build your home, get started by setting a plan of action.
✔ Envision your dream home – is it a two-story home on three acres of land, or a ranch-style home surrounded by neighbors? To understand what it will take to build your home, you must first define your vision.
✔ Find a builder – there are plenty of builders who can help bring your dreams to life; take the time to meet with several individuals and understand how their services stack up to help you build the home you’re looking for.
✔ Select a lender – you have many options when it comes to choosing a lender. Financing can be a big decision, so take the time to consider what you’ll want in a lender – a personal relationship, local service, the right mortgage options – and find one that matches your needs.
✔ Set a timeline – once you’ve assembled the right team, it’s important to understand the right time. Often, homes must be completed within one year as part of the loan requirements. Work with your lender and your builder to understand a timeline that’s realistic for you.
Prepare Your Finances
The most important step in building the dream home you desire? Making sure you have the means to do so.
✔ Understand your financing options – a good lender will work with you to ensure you’re familiar with all options and help you understand the best loan options for your needs – whether you’re just looking for a construction mortgage, or you also need financing for land. Just like a regular mortgage, you can work with your lender to uncover which option is right for you.
✔ Get pre-approved – by working with your lender and sharing your income, debts, and credit score, you’ll understand what you can afford, ultimately avoiding surprises throughout the process and helping you plan for a realistic build.
✔ Understand all of the associated costs – there are many costs associated with building a home beyond construction or land costs, including homeowner’s insurance, property taxes, permits and more. Be sure to work with your lender to map out the entire picture to make sure you’re financially prepared.
✔ Be flexible – if your borrowing limit is different from what you initially hoped for, it’s important to work with your lender and builder to adjust your options for building an affordable home, while maintaining the amenities you want.
✔ Receive a final appraisal – once you’ve decided on a home with the builder, gather the contract, cost breakdown and blueprints and provide them to your lender. Your lender will then work with an appraiser to understand the actual value of the home – serving as the last piece in the puzzle to secure the loan.
✔ Secure the loan – once you have the right plan in place, it’s time to work with your lender to solidify the right construction loan for your needs.
Throughout the Process
Once building starts, stay active in the process to make sure you’re on time and on budget.
✔ Stay on track – a key element of the construction process is making sure that the project is on budget. Your lender should work with the title company and the builder to ensure that the project is on budget, and make sure that there are no surprises from the builder.
✔ Understand your alternatives – for when the unexpected happens – like an issue with the land, or the desire to add out-of-budget amenities. Your lender can help you understand the cash flow or alternative means to take care of these expenses.
✔ Maintain your finances – avoid additional debts that may impact your credit score throughout the process to preserve your financial standing and avoid any issues with your mortgage later on.
You finally did it – your dream home is here! Understand where to go once you’re in your home.
✔ Understand your mortgage – your construction loan can be modified into a mortgage loan once construction is complete. Work with your lender to understand whether an adjustable-rate mortgage (ARM) is still the best for your situation, or if it’s the right time to explore fixed-rate options.
✔ Stay on top of your payments – you’ve worked so hard throughout the entire process; make sure that you’re making regular, timely mortgage payments to keep your dream alive.
✔ Stay in touch with your lender – even though your home financing is settled, your lender knows people who can help your family with its entire financial picture – from auto loans, to 529 plans, to general checking accounts. Now that you have a relationship with your bank – there’s no telling where it can go from here.
While there are many things to check off of your home building to-do list, you don’t have to do it alone. Your lender can help you through it all – from securing financing, to providing advice in selecting a builder, to building the relationship beyond your construction loan and mortgage. Building this relationship with your lender will help ensure that you’re making the most of your resources and navigating a complicated process with someone who has been there before.
Take the first step today with Citizens Bank. As a local bank, we’ve been helping individuals in the southeastern Wisconsin region build their dream homes for 125 years. Contact us today to get started.