I'm thinking about having a Custom Home built outside of a planned community. What questions should I ask?
Q. How do I get started?
A. Assuming that you have a building site in mind, or that your builder does, you'll have to decide on the basic type of house and the price range you wish to stay in. A meeting with your builder will lay out the square foot size for your price range. The next step is to have preliminary plans drawn. Plans provided by an architect or a personalized hybrid of existing plans provided by your builder. That is a simple sketch, to scale, of the floor plans and a front view of the house. Once we have plans, we'll be able to tie down a cost estimate. At this point you'll also have what the bank requires to start the loan process. We'll then make any changes on the preliminary plans. When we're satisfied with them we'll send them out to have the final construction blueprints drawn.
Q. How long will it take?
A. The plans generally take 2 weeks for preliminaries and 2 weeks for the final drawings. The construction itself will take 4 to 5 months. In the summer months it usually goes quicker. The entire process generally takes 6 months from conception to completion. Often times we can complete the entire process in as little as 4 months by using an existing plan. Other times decisions made during the pre-plan stage can take months in themselves.
Q. Will I go over budget?
A. Probably some, but it will not be due to this contractor raising the price. It will be due to you wanting to add to or change some things as the house is built. Some usual changes are in the electrical maybe you want to add floodlights or recessed can lights. Maybe plumbing; you may want to upgrade the kitchen faucet or the powder room fixtures. We will keep track of these changes with a change order form. Most people do end up adding $1,500.00 to $3,000.00 on average and some quite a bit more. The other way you can go over budget is through your allowance items or due to unexpected subsurface conditions on your lot, i.e., rock or high plastic soils.
Q. What is an allowance item?
A. There are typically four basic allowance items. They are the flooring, the light fixtures, the kitchen and bath cabinetry and the appliances. Most people do not know exactly what they will want at the beginning, so an allowance amount is included in the contract price. The owner then shops their flooring, light fixtures, etc., with that amount set up in their loan. If they spend less, a credit is due. If they spend more, an extra expense is incurred.
Any item may be handled as an allowance item if desired. Some other items also handled as allowance would be the septic system, which can vary in cost, or the well which is always an allowance item.
Q. What is a subsurface condition?
A. Subsurface conditions are possible conditions beneath the surface of the ground that are not possible to know or not able to be calculated until excavation is underway.
Rock, high plastic soils, or the needs for excessive amounts of fill to be hauled onto or off the properties are generally the conditions that arise.
Rock is generally a problem when it is to the point that the usual excavation equipment will not work requiring the need for specialized equipment or blasting.
Plastic soils are a condition common in St. Charles County. Plastic soil is a type of clay. Its characteristics are that it expands and contracts based on the moisture present. Basically it is a sound base but needs extra cushion and drainage precautions.
Q. What kind of windows and doors should I use?
A. Windows are generally going to be either wood or vinyl. If your interior is to be stained then wood windows are the usual choice. If you plan to have a painted interior you may want to use a vinyl window, which is less expensive. Exterior doors will generally be insulated steel units. Your contractor can discuss the different manufacturers
Q. What kind of heat source should I use?
A. Natural gas is an excellent choice but is generally not present on most custom home sites. Straight electric heat is too costly to run so generally your choices are either a heat pump or propane gas furnaces both in varying degrees of efficiency. There is also a ground source heat pump, which are very efficient but tend to be costly, about double the cost of a conventional system.
Q. What about financing?
A. Financing for a custom home is similar to any other, in that you shop for your best deal on permanent financing. Once you have loan commitment for your permanent loan you'll need a short term construction loan. Many banks offer both permanent financing and construction lending "in-house" to make it easier if you choose to assume that responsibility yourself. Some lenders may refer you to another bank. Another option is to ask that your builder assume the responsibility of "carrying" the loan throughout the building process, relieving you of the immediate cost of ongoing interest payments while your home is under construction. The preceding serves as an incentive to the builder to keep construction "on track and on time." Regardless of who gets the loan it will be run through an escrow company.
Q. What is an Escrow company?
A. An escrow company is a third party whose job it is to monitor the progress of construction and release funds as the contractor issues' vouchers (checks) for work completed. The escrow company assures the lender that no liens will appear on the property by collecting lien waivers from all contractors and suppliers before releasing their funds.
The lender on the construction loan will require monthly interest only payments on whatever amount has actually been paid out to date. Usually the amount paid in interest is around $1,000.00.
Q. Whom should I choose to build my custom home?
A.. You should be comfortable with your builder and familiar with his or her work. You should feel that you can communicate well and that answers are honest and not misleading. You should check references of previous jobs and jobs in progress. Stop by jobs in progress and look at the workmanship. A builder in close proximity to the site is generally preferred
Q. What about service after we move in?
A. The builder should have a basic one-year warranty as well as all equipment warranties. You receive a list of all of the individual subcontractors used on your home for future reference.