While actual construction normally takes six months or less, the ideal home can be years in the making.

Pointing Couple
Building a home is an exciting event in your life -- be sure to do it right!

The key to developing a realistic building budget is to give yourself enough time to research home plans, make product selections, and find out what additional costs apply to your area. Before number-crunching begins, you must have a clear mental picture of your dream home. There are plenty of places to get ideas, including magazines and "parades of homes." Whether you're going to build from a stock plan or design a custom home, studying plans is a good way to determine how much square footage you need and what kind of house will fit on your lot.

Make a list of the products and finishes -- doors, windows, flooring, cabinetry, countertops -- you would like, and find out approximate costs. Once you've decided on what kind of house you want and have consulted a lender to determine how much you qualify to borrow, obtaining an estimated cost per square foot will help you figure out what you can afford.

If you're buying a stock plan, find out if the plan service will estimate the material and labor costs of building the home in your area. If not, your local home builders association should be able to provide average square-foot costs. Remember that the square-foot cost estimate is a very broad, general number that should only be used for guidance purposes. You won't know how accurate it is until the house is designed and construction bids are obtained.

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

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.

Picking a Plan

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.

Man Working Construction
Your builder will oversee all aspects of construction.

You've found your perfect home plan, and you're eager to start building. But this is no time to be in a hurry. Choosing a builder is one of the most important decisions you will make.

It's a good idea to get bids from at least two or three different builders. Pick those builders carefully. Ask friends, family members, construction trades workers, and others in your community for recommendations. Watch the real estate section of your newspaper for names that come up again and again in a positive light. Look for signs in front of new homes listing the builder's name, or go to your county assessor's office to determine who built a recently finished house that you admire.

After compiling a list of builders, call your local home builders association to determine if they are members. Although membership does not guarantee the builder's abilities, it's an indication that the builder is reputable.

The next step is to meet with the builders you are considering hiring. If a builder does not want to meet with you directly, go somewhere else. Make sure the builder has experience in the size, style, and price range of home you are planning. Ask for a list of all houses the builder has built within the past few years, and contact the owners to ask about their experience. Visit current building sites to see if they are clean and well-organized. If a builder clears these hurdles, is genuinely interested in your business, and makes you feel comfortable, you're ready to make a commitment.

Couple talking to advisor
A careful review of the contract is essential.

After you have chosen your builder and agreed on a price, it's time to get it all down in writing and have a lawyer review the document. A good contract spells out, in detail, each part of the job. This includes dates for starting and completion, building specifications, and materials lists. You'll also specify a payment schedule. Your contract should specify the brands, sizes, and finishes of products used in the house, with prior agreement about acceptable substitute materials. It should also ensure that the builder is responsible for meeting all codes, securing permits, and meeting other laws pertaining to the project. The contract should require that the site be left clean.

Finally, it's time to start building. Construction of your home should take from three to six months, depending on the home's design complexity and weather conditions. The first step will be excavation, when subcontractors will grade the lot and dig the hole for your basement or footings. The footings, foundation, or supports will be put in place, and drainage tiles will be installed around the foundation to control the flow of water around the house. Extra fill dirt may need to be hauled in or out.

Next, framers will build interior and exterior walls, floors, and ceilings. Installation of the roof, windows, sheathing, and siding usually come next, protecting the home from the elements while the electrical, plumbing, and ventilation systems are roughed in and installed. Drywall will be installed and prepared for painting, and cabinets and interior trim installed. Carpet typically gets installed last, after final interior painting, staining, and caulking. Near the end of this process, the driveway and sidewalks will be poured.

It's not unusual to make design changes during construction, but you'll want to minimize them. Moving a wall, for instance, can be expensive, especially if it's already been drywalled. For any change you make, have your builder fill out a change order that you both will sign.

During construction, make periodic visits to the building site. Consider hiring an architect or other professional third party to monitor your home's progress. He or she is likely to detect problems earlier than you would and take corrective action.

Before you hand your builder that last check for your home, do a final walk-through with the builder. On the day of the walk-through, the builder will carry a clipboard and room-by-room checklist to record notes and check off items found to be satisfactory. Do not feel rushed during this important part of the building process. Look above, below, and behind everywhere you and your flashlight can reach. By the end of the walk-through, your builder will have compiled a "punch list" of items that must be attended to before the job is considered complete. You and the builder will sign the punch list. Depending on the extent of the punch list, the final payment may be held until the tasks on the list are completed. Unless there are major problems to be corrected, you're ready to accept the keys and move into your new home.


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