Building Your Own Home For Dummies
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Building your own home is an exciting and exacting process that can be daunting, as well. Make your home-building experience easier by first having a firm grasp on your financial picture. You also need to find the right contractor, prioritize design elements between must-have and would-like-to-have. And, you need to keep track of all the people who are helping making your dream home a reality. This Cheat Sheet shows you how!

Finding the right contractor

Making the decision to build your own home leads to a search for a contractor. To find the right person to oversee the building of your home, touch on the following topics with each contractor you interview. The contractor’s responses can help you determine whether you’ll work well together.

  • References: Ask for the addresses of all the houses the contractor has built and ask several owners how satisfied they were with the contractor. If the current owner isn’t the original homeowner, find out how the house is holding up after years of use. The older the house, the better to see the quality of construction.

  • Previous experiences: Ask what the contractor’s worst building experience was and whether the owner was responsible. Try to assess whether the contractor takes responsibility for problems or simply defers blame.

  • Your involvement in the construction: If you’re interested, ask whether the contractor minds you helping with the labor.

  • Cash flow: Ask how the contractor prefers disbursing payments to subs and suppliers (for example, who will sign the checks).

  • Communication: Ask how the contractor prefers keeping the lines of communication open — via phone, e-mail, physical meetings — and how often she’ll check in.

  • Decision making: Ask whether he wants you to be involved in every decision or whether he’s comfortable making decisions when you’re unavailable.

  • Team spirit: Ask what steps the contractor takes to keep the workers, neighbors, and inspectors happy on the project.

  • Pet peeves: Ask for a list of ten things that bother her most about customers.

  • Hypothetically speaking: Ask what the contractor’s first steps would be if he took over a project that was three months behind schedule. Also ask how he would handle a project that was 25 percent over budget.

Figuring your finances

Building your own home means you keep a close eye on the money flow. Determine finances before you start the process of building your home and review them periodically. Fill in the blanks in the following list, and keep this important info nearby for quick recall when you meet with your loan officer:

  • Total cash available: __________

  • Amount of cash I’m willing to put toward the project: __________

  • Maximum monthly payment I’m comfortable making: __________

  • My payment can be increased by __________percent from income tax savings.

  • This payment is __________ percent of my gross monthly income as reflected in my tax returns.

  • Monthly credit card and installment loan payments: __________

  • Credit history or credit score: __________

  • Type of home I want to build (owner occupied versus secondary residence): __________

  • I intend to have this property or loan for __________ years.

  • I plan to use a contractor, yes or no: __________

  • My home will be __________ compared to other homes in the neighborhood (similar, much larger, much smaller).

  • It will take __________ months to build my home.

Considering the design elements

Whether you’re buying an existing home or building your own, you’ll have design needs and design wants. Design needs include number of bedrooms, size of your home (roomy for guests or small to encourage teenagers to move out), while design wants cover items like whirlpool tub, gourmet kitchen, romantic master bedroom. To keep these essentials in mind, make two lists:

  • Five design elements my new home must have

  • Five design elements I’d like my new home to include if my budget allows

Keep both lists on hand when you review stock plans or meet with your architect or designer.

Contact information to keep on hand

If you’re building your own home, you need to keep track of myriad details and the related contacts (people). Make a physical list of contacts and make copies to keep on-site, in your car, at your office, and anywhere else you can think of. People to put on the list include:

  • Architect

  • Contractor

  • Loan officer

  • Engineer

  • Landscape designer

About This Article

This article is from the book:

About the book authors:

Kevin Daum has 22 years of experience in the real estate and mortgage industry. He is founder and CEO of Stratford Financial Services, and is the leading expert in custom home financing. Daum has financed more than 800 custom homes and has published numerous articles on construction financing,mortgage education, and entrepreneurship.

Janice Brewster served as editor of Log Home Living magazine for five years.  Brewster has been involved in the custom home industry for more than 10 years.

Peter Economy is Associate Editor for the Drucker Foundation's award-winning magazine Leader to Leader and a featured expert for He's the coauthor of the books Leadership Ensemble: Lessons in Collaborative Management from the World's Only Conductorless Orchestra, Strategic Tools for Social Entrepreneurs: Enhancing the Performance of Your Enterprising Nonprofit, and many others, including Consulting For Dummies, Home-Based Business For Dummies, and Raising Capital For Dummies.

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