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How It Works

The Appraisal Process

By | Construction, Financing, How It Works, Learning Center | No Comments

In the residential construction home business, one of the more trickier things to make sure sufficient funds are available for your project is the appraisal. Essentially, once a client orders their home and your custom home plans have been drawn up, we send the contract along with the blue prints to the lender. Of course the lender needs to place a value on the structure and the only way to do that is to get an appraiser to determine its value. This cost is passed along to you the client and it typically runs around $450-600. Depending on how busy things are in the real-estate world, appraisals can take up to 3 weeks.

Appraisers use a software program where values are placed on such things as square footage, sizes of garage space, quality of products, such as granite or Formica. Where you build is perhaps the largest contributing factor because they will pull values from other homes in the area that recently sold or were constructed. View lots, homes on acreage, existing structures, all play a role in determining worth of the project.

After the appraisal is completed, the lender will set in motion what is referred to in the business as “funding the project”. If the value of the project, cost of construction or acquisition cost is more than the appraised value, the client(s) will have to bring “money to the table” to cover the difference. If your appraised value is more than the acquisition cost, depending on how long you have owned the land, a down payment will be determined to fund the loan. Most construction loan programs that banks use take into consideration the length that you have been on title with the land; if over a year, known in the business as “seasoning”, you can obtain 100% financing. You will have to confirm of course if your lender offers this. If, though, you are negotiating on land, then banks offer different programs that will require as little down as 5% up to 20%. For the most part, rates are similar, but “closing cost” can often be different. Closing cost is margin that in essence means the cost of doing the business of getting the loan in place. Say a bank says they have a 3% closing cost. If your loan is $300,000 then it would equate to roughly $9,000 dollars. That money can be for the loan agent, but mostly it’s what the bank is making off the sale of the money it uses to loan to you. A strong word of caution here: when they say 3%, it does not always mean 3%. They still have junk fees. A junk fee might be “courier service”, “Administrative Services”, “Pen Use”… Not to be funny, but when you read some of the fees, you might want to chuckle to keep from crying. We did mention 3% closing cost but others can be 2% and some higher if your credit worthiness and or FICO scores are difficult. You might be able to negotiate some of the junk fees, but I have found it almost impossible to negotiate the closing cost fee unless it is for a large sum of money. At this point it’s time for a review:

Let’s reflect on what we have learned

  • Select a builder to build your home (True Built Home should be your logical choice)
  • Select the home you want
  • Order your home-processing payment from $2500-3500 will be required
  • Get your custom plans completed by our excellent design team-depending on work load and any changes you make it can take up to 2 weeks
  • At this point we can send the blueprints to the lender along with on the other important paper work for appraisal, 1-2 weeks. We also send the plans out to get engineering if needed-1-2 weeks
  • Once appraisal has been completed, the lender normally collects all the bids and estimates for the project and “runs” the numbers
  • Once engineering is done and all the financials look good, client submits for building permit
  • Once the permit is completed-4-6 weeks for most counties/city, you’ll want to call your local True Built Home Branch and request your pre-con meeting
  • You’ll want to bring all county/city paper work, along with your plans stamped from the county/city to the per-con meeting
  • Under normal construction times, we should be able to get a foundation crew to your site within 2 weeks. During especially busy times, it may take longer
  • The pre-con meeting finalizes all selection and any last-minute changes to standard or upgraded items
  • Depending on cost of the project and whether or not you own your land, a down payment maybe require to the lender to fund the project
  • True Built Home is given an escrow number and we verify funds are available. If you are a cash deal, we collect a percentage of the first payment at the pre-con meeting

Granted, all the above things are not “inspired”, it typically flows this way.

One of the fundamental things the owner of True Built Home, Lewis D Mann, wanted when he started the company was to impart as much knowledge about the products he puts in the homes; the process that True Built Home uses to construct their beautiful house and the transparency of the process to you. We hope you find this article informative.

For more information regarding appraisals, you might find this article interesting as well.

If you do happen to come across a dead link, please notify us. Thank you.

 

New Home 101: Building a New Home, Part 1

By | How It Works | No Comments

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How to go about building a new home

If you’re new to building a home, it’s good to have a guide for how to go about it. To get the best quality home for the lowest price, you have to know the in’s and out’s of the process. New Home Source has a guide to get you through building a new home at: http://www.newhomesource.com/resourcecenter/articles/new-home-101-building-your-new-home-part-1. At True Built Home, we couple our experience with your vision to make sure you get the home of your dreams for the best value: http://truebuilthome.com/.

9 Tips for Hassle-Free Home Construction

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Find out how to build your home with as little difficulty as possible!

If it’s your first time buying a custom built home, it can be difficult to know what to do. HGTV has compiled a list of 9 tips to guide you through the home buying process at: http://www.hgtv.com/design/decorating/clean-and-organize/9-tips-for-hassle-free-home-construction. Whether this is your first or fifth home construction project, True Built Home is there to help you create your dream home. http://truebuilthome.com/.

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Build a True Built Home and Build Your Wealth

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Buying a home by the traditional route can be a bad investment, especially if the economy takes a downturn. Buy the right home, though, the right way, and you will find yourself building your wealth instantly: https://www.youtube.com/watch?v=CZBIgFJ8SdQ. At True Built Home, we work with you to create a home that will likely be worth more than you pay, even if economic conditions change. Take the road less traveled and make a good investment with a new, custom built home: http://truebuilthome.com/.

How to Buy a Home

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True Built HomeIf you are in the market for a home, be it your first or your fifth, it may not seem possible to build something new. It can be intimidating and, if you’re not careful, the cost can inflate quickly. If you work with a good contractor, however, and keep these steps in mind, building a new home may be within your price range.

When you take out your loan, make sure you keep in your mind the very real possibility of unexpected costs during construction. Instead of just taking out as much as you can at the beginning of the project, put in a contingent fund equal to 5-7% of the loan for emergency funds. This small foresight will save you headaches down the road.

Next, you want to find a focus point for your project. If you are building as a couple, make sure you sit down together to discuss this. When envisioning your new home, what aspect is most important to you? Is it the quality, the functionality, the investment? Pick one or two focus points to guide you through the process. This will give you confidence and keep you from losing track of what’s important as you go through the process.

Make sure when you enter into a deal with a builder that you understand how much money you are putting into the project in relation to other homes. You want to get the most for your money, but you also want to temper your expectations based on your price range. If you want a higher quality home than you can afford, you may want to consider downsizing. That way, you can afford to pay more per square foot.

When deciding if you can afford to build a new home, it’s helpful to know how much a loan officer will be willing to offer you. A great tool to give you a roundabout estimate is a loan calculator, but you need to know what to include to properly use this tool. Credit card and car payments, as well as any other debts you may be paying off, are what a loan officer will be most concerned about.

Once you decide to either build or buy a home, you will want to get a pre-approved loan. This will be crucial during the price negotiation phase.

After all is said and done, if you buy a new home, chances are your equity will be higher – much higher – than if you buy used. You may save money in the short run, but building new is a very profitable investment. Read more about how to buy a home, including links to a reliable loan calculator and more, at: http://truebuilthome.com/how-to-buy-a-home/.

Mortgage Basics for Building a Home

By | Financing, How It Works | No Comments

eplansBuilding a home isn’t like buying a home, and the mortgage you will have to take out will differ considerably. Don’t let that deter you, however: if you keep the basics in mind, navigating the process will be much easier than it may at first appear.

The first thing to understand is that the mortgage you need to take out on a home building project will be threefold; that is, you will need a loan for the purchase of the land, the construction of the home, and the permanent financing for the home post construction.

Lenders are likely to be most hesitant about the first loan, as land can be difficult to resell if your plan falls through. Because of this, you may be faced with a large down payment, which you should pay in cash if at all possible, and high interest rates.

If you already own the land you intend to build on, or if you are able to pay for the land straight up, you will of course skip this first loan. In this case, talk to your lender about the possibility of merging the construction loan and permanent finance loan.

The next aspect of a mortgage to consider is the loan for construction funds. When looking for lenders, make sure you find one that will cover this, because not all will. Also, make sure you are already working closely with your contractor, and that you have all your paperwork in place. Blueprints and permits are going to be required, as well as verification that your contractor is licensed and bonded.

The last loan is more similar to one that you would take out on a pre-built home. This loan goes into effect once the construction financing ends, when the house is fully built, and is almost always a permanent loan.

Different lenders go about this process different ways, however, and these three loans are subject to change based on who you go to. For example, some lenders may opt for a rollover loan, which would merge all of these into one package. This way, you only have to qualify and to fill out paperwork for one loan, saving you money on legal aid.

However you go about your loans, it is important that you make sure you have the best lender for your situation beforehand. Look around for a while on the internet, and talk to your contractor, to get their opinion. Eplans.com goes into more detail about mortgage basics for building a home at: http://www.eplans.com/community/mortgage-basics-for-building-a-home.

At True Built Home, it is important to us that you get the most for your dollar. We are there to help you through each step of the process and ensure that you get the home of your dreams: http://truebuilthome.com/.

8 Financial Mistakes to Avoid When Building a New Home

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Building a new home

When building your own home, you may be wary of making decisions – both small and large – that will cost you more money than you should be paying down the road. All of these pitfalls are common enough for first-time home buyers; avoid them and your wallet will thank you, as will your new home.

The first thing the budget-conscious home builder should consider is size. The average home is between 1,500 and 2,000 square feet: if you plan on going above this average, make sure you need the extra space enough to justify the extra cost. One way to keep yourself in check is to picture yourself in 10 years time. Will you still need that much space? If so, it’s worth the investment, but if not, consider downsizing before construction begins.

While you are contemplating the size of the house, before the final plans are set in stone, be sure to give consideration to your home’s potential resale value over time. Even if you plan on passing it down from generation to generation, remember that the future is never certain. Your best bet is to build a home worth investing in.

Be careful not to allow extra features that you don’t need to hike up your mortgage payment. However, it is also advisable not to sacrifice all amenities for a lower initial cost. Remember that you can always add to your home, but certain features, such as a full basement, cost much less to build with the home than to build years down the road. You will need to determine the proper balance that works for you between saving on the cost of the home now versus including amenities now which would be more costly to add later. But to be certain, you should never sacrifice structural integrity for a lower price.

By the time you begin the process of physically building the home, you should have built a strong trust bond with your contractor. That being said, you don’t want to go into this process blind; check in on the building process whenever possible and make sure you always know what is being done, when, and to what standard.  Remember that minor imperfections now can cost you thousands in the years to come.

Lastly, when building your home, keep in mind that not every aspect of your dream home is going to be practical. If you want to add something that is going to cost you dearly, or that your contractor advises against, it’s best to give it up. It will be your home for the years ahead, and you shouldn’t compromise your vision completely, but if something is impractical it may well be a waste of money.

U.S. News and World Report goes more in depth on how to save money when building a home here: http://realestate.usnews.com/real-estate/articles/8-financial-mistakes-to-avoid-when-building-a-new-home/.

One of the most important factors in the cost of your home is who you trust to build it. At True Built Home, we work with you to get you the best product for the most reasonable price. Visit us for more information at: http://truebuilthome.com/.

Build the House You Want (and Can Afford)

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Building a HomeFor many people, deciding to build a home for the first time may seem like a nearly impossible task. Don’t let the time commitment, money, or stressful decisions deter you, though; building a home is a wonderful process that results in something you can really call your own home, not a cookie-cutter replica of someone else’s. It is very possible to get the home you want at a good price if you follow these guidelines to the homebuilding process.

Before any work is done to the building, the first thing you need to do is make sure you and the builder are on the same page. Read your contract thoroughly; if there is something you don’t understand, have someone who does explain it to you. Even after the contract is signed, stay aware of everything that is happening and keep close track of every decision to add or subtract from the building plans.

The next thing you want to keep in mind is the cost of building. This may sound obvious, but it is easy to lose track of just how much money you are spending if you don’t pay close attention to your budget. Don’t over buy – spending money you may not have on features you may not need – but also don’t under buy. If you are planning on adding an extension to the house, remember that it will be less expensive to start now, before the home is built, than to add on later.

When it comes to building codes, your contractor should know them well and there shouldn’t be anything you have to worry about. That’s the ideal situation, anyway, but it isn’t always the case. Your contractor will have likely built many homes in many different areas, and may make mistakes that could cause you legal trouble down the road. Make sure you know what is and isn’t allowed by local and state codes and double check that everything is in accordance with building codes.

Lastly, when working with your contractor, remember to be flexible, diligent, and businesslike. Your builder will know if something that you want for your home isn’t likely to be workable, or if it is going to be too costly. Often, you have to know where to find a compromise between your vision and your builder’s expertise.

As far as diligence goes, don’t be afraid of sounding redundant or overly concerned – if you think there is a problem, address it with your contractor. You are going to live in this home for many years to come, and it’s better to be sure of what is happening than to be in the dark until it is too late. When you do address your contractor, however, be sure to remain businesslike in the way you speak and the way you carry yourself.

For more tips on how to go about building a home, as well as what questions to ask during the process, read this article from About Home on the subject: http://architecture.about.com/od/buildyourhouse/a/buildyourhome.htm.
At True Built Home, we are committed to giving each and every customer the best experience possible, as well as the best home. Our homes are efficient, economical, and sustainable: the perfect place to create a lifetime of memories. Visit us to learn more about how we can help you build your dream home at: http://truebuilthome.com/.

A Step by Step Guide to the Home Building Process

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The 10 Steps to Homebuilding

How a home is made

A lot of customers new to the home building process don’t know what to expect of the months ahead. It’s important to know what you’re getting into before you take the plunge and decide to build a home. Check out this article on how a home is built: http://www.newhomesource.com/resourcecenter/articles/a-step-by-step-guide-to-the-home-building-process. At True Built Home, we guide you through every step of the process to ensure that the home you get is the best home for you: http://truebuilthome.com/.