Final 5 Steps Before Breaking Ground
Happy Tuesday Everyone!
Wait! Before you DIG! Don’t forget these Final 5 Steps before breaking ground! We have been soooo busy with house planning I have a lot to share with you on this post! We just broke ground and are finishing the driveway as we speak, but between our last post Let’s Get Started! and now you must read this because there are some very critical steps that we would highly recommend before that trac-hoe and bulldozer pull up to your land!
Shannon and I are starting this house from scratch. The land had nothing on it, no driveway, no electric, no sewer, nada, zilch! Our last post, which is linked above, we went over the nuts and bolts of building a house- Allowances, Utilities, etc. Now, for your next steps:
1. Finalize! Finalize your detailed plan with your builder so you have the bid in writing. This will ensure any deviations from your plan are a mistake. We actually met our builder out at the exact spot we wanted to build and he brought the measurements of our plan to stake out the 4 corners of the actual house. This lets you step back and see exactly how you want it to be placed, the angle, and how you want your driveway to meet up to the garage. Shannon and I also brought out stakes and surveyors ribbons to stake out the entire house. By doing this, you are able to get a visual of the flow of the house and size of the rooms. This will help prevent you from getting half way through and thinking you wish you had made a room bigger/smaller. Now is also the time to get a materials list from your builder to shop it around to lumber yards. Once you have the final estimates from all the lumber yards, sit down with your builder to make sure they are comparing apples to apples. Many lumber yards use different size, quality, and quantity in their line item descriptions- so this can get confusing.
2. Set Your Wiggle Room:Many people have told us to make sure before we have our price set in stone for the build of our house to increase the overall bid for everything by 20% and that is the amount of money we should borrow from the bank, just so you have room for inflation or underlying costs. I completely recommend doing this, IF you can. As we went through our spread sheet of our different allowances and cost for materials, we did increase the amounts for wiggle room, but depending on what the cost of the house you are building, 20% can be a huge amount and we could not increase ours that much and include that in our construction loan, it was just quite a bit of an extra chunk! With that being said, staying on budget and staying very organized is a huge way to make sure to stay within the amount we received from our loan.
3. Take it to the BANK!: Approximately a month to 6 weeks before you are ready to break ground, it’s Monopoly time. A.K.A. time to apply for your construction loan. Just a FYI-times have changed and no longer can you ask for a certain amount to build your home, bank checks your credit, and if your good, you get the money and then start your house. You need to prove the amount that you are asking for. Here are some examples: at this point if you need to do some shopping around so you know what amounts you are needing for some of the major items: Driveway, water install, electric install, windows, kitchen cabinets, concrete, HVAC, appliances, you get the idea. You don’t have to get exact with items such as door knobs but know or have a close approximation on these costs. Some banks may actually ask you to prove these amounts with the actual letterhead bid from the company’s you are pricing out, or in our case we gave all of these amounts to our contractor and he included them in a new updated bid with all the costs for everything typed out and this is what we provided to the bank.
The approval process of the loan takes approx 30 days or longer depending on the bank, time to get the appraisal, title search, etc, so plan for this time period so it does run into your dig date. Although we were very eager to start digging to get the show on the road, we would advise to make sure to your loan has been approved and you have signed for the loan before you dig. We have heard stories of others thinking all is going to go well, then some type of lien pops up on title and now the excavator/contractor is owed money and there is no construction loan to pay for their services.
4. How to pay builder expenses: We realize their is more than one way to skin a cat, however, we will share the way we are going about staying organized to pay out to different areas of building our house. We worked closely with our banker on the best options to disperse the money when needing to pay for jobs on the house during construction phase. Here are the 2 ways he expressed to us that works best to stay the most organized.
- Gather your receipts or invoices from the contractor/sub-contractors monthly. Turn these receipts into the bank, then they will write checks from your loan and mail them directly to them.
- Create a separate checking account, then when you get a few weeks of receipts from the contractors/sub-contractors, turn in the receipts to the bank. The bank will deposit the total amount into the checking account for that time period. By writing the checks yourself, you can ask the contractor to meet you to inspect the work for payment.
Both of these options will require you to keep careful track of counting down what you have spent, but just think ahead how you want to handle your loan money. I loved this expense sheet to organize what we spend from this awesome blog! they Free printable shown above called: Simple Expense Sheet
5. Request an Address: Contact your local 911 office and request for a new address. Just a few tips from our experience: You have to know exactly where you want your house to be built before they will come out. They use GPS to locate the exact point the house will be located. We left our 4 corner stakes and 911 used these as our reference. Also, make sure you ask approx. how long the wait is to come out and do the work, sometimes there is a few weeks lead time. Also, keep in mind you must do this before stating to dig and have lumber delivered. Some vendors company’s will not deliver to your property without an address. Some areas your electrical company may require you to have an address before they come out and run electrical lines also.
Thanks for reading today! We have so much more to share with you! We love to hear from you, and please share with a friend!
Shannon and Jamie