You're about to take a crash
course in homeowner finance.

Finance and Home Plans

Most lenders advise that you become prequalified for a mortgage. You can do this as much as a year in advance of starting your building project. When you build a home, you apply for two kinds of loans: a construction loan and a permanent loan. The construction loan is short-term and covers the time it takes to build your home. During this time, the loan is paid to you in installments, or draws, to cover building costs as they occur. When the term of the construction loan expires, it's replaced with a regular mortgage, which usually has a term of 15 to 30 years. Some lenders package the two loans into a construction-permanent (or "construction-perm") loan. In this case, when your house is completed, the construction loan automatically converts to a permanent loan.

Stock blueprints can save you weeks or months of preparation and save thousands of dollars over hiring an architect or designer to design a home from scratch. But purchasing a set of plans is only the beginning of your preconstruction process. Once the plans arrive, take them to your local government building department to make sure they meet local codes. If you want to make minor changes to the design, such as moving the location of nonstructural interior walls or adding bump-outs on exterior walls, your builder should be able to help you. More involved changes, however, may require the expertise of a professional building designer, architect, or engineer. Even if you find a plan that you feel is perfect for you, it's still a good idea to have the blueprints examined by a pro who can point out the design's merits and possible drawbacks as they relate to your site, climate, and local building codes. Remember, if you make many alterations to a stock home plan, you might rack up design fees close to the cost of having a custom home designed especially for you by an architect or designer. Discuss fees up front. Architects generally charge a flat fee or an hourly rate for counseling and making alterations to a plan. Modification services offered by home plan providers usually charge on a per-item basis.