Binkies and Briefcases

I hope that by spring these Building the Dream posts will be filled with lots of fun pictures of construction!

We are so fortunate to be able to build our forever house while our children are young and they will remember growing up there.

I’m thrilled beyond belief to be able to customize our house and hand pick everything from the flooring to the cabinet colors, etc. ….eventually.

When I tell people we are in the process of building on a few empty acres of land they almost always say the same thing, “That is awesome! We hope to be able to do that one day too.” (Unless they already have, then they tend to launch into their own horror stories.)

Since it seems to be such a popular dream and we are in the middle of the process right now, I thought I’d share some of what I’ve learned so far.

1. You will need an engineer. I happened to be married to a civil engineer. THANK GOD I had the foresight to do that years ago. Seriously. If you do not have your own personal P.E. who can sign and seal your plans, then add an additional $25-30,000 to your budget for the services of the one you will need to hire. I’m not kidding. Our local government required that our plans be signed and sealed by a licensed professional engineer, so this is not the kind of thing that most homeowners can do themselves.  

2. Erosion and sediment control, sewer, and storm water are all different things. They all need their own plans and you cannot even apply for a building permit until you have all of these things and they are approved. We currently have invested over $10,000 in application fees alone for these kinds of plans, plus the sewer hook-ups, some tree removal, etc.  These fees usually come out of pocket because the bank wants to be sure you can build on the lot before they will give you a construction loan. Like I said, since my husband is a professional engineer, we didn’t have to hire one, but if you do your fees can easily be triple what ours have been.

3. Pad the budget. As you can see from the way this list is taking shape, it’s very, very expensive. No matter what you do, DO NOT go out and look at model houses in developments that are in your budget and expect a private builder to be able to give you a similar house for that amount of money. You will pay more for a custom-build because a private builder doesn’t have the ability to place huge bulk orders (Those model homes will only let you chose between 4 of 5 different types of cabinets or flooring because they already have huge bulk orders for the material.) Plus, you have to pay extra for the land, which is included in your home sale when you buy in a development.  I would recommend having at least $50,000 available to be dedicated to permits and fees on top of your budget for the actual house.

4. Pad the time estimate, too. Double the time frame you had in mind. You might want to quadrupole it.  It has been 1 year and three months since we first time we saw our land and knew it was meant for us. Although we have been working consistently the entire time and making progress every day, we still don’t even have the building permits yet. Approvals for land development plans can (and do) take months at each step. We are in the final phases of permitting. Our fingers are crossed that we can be in our new home by September of this year. That will be almost exactly 2 years since we found our land. I’m tapping my foot and impatiently waiting.

5. The finance methods have changed recently. We know several families that built homes in the 90’s when you could get an interest-free construction loan and defer payments until the new house was built and make it all contingent on the sale of your current home. There is very little chance of doing any of that right now. Even though we both have excellent credit scores and we had a very large sum of cash in the bank thanks to an early inheritance, we were told we needed to sell the house we were living in and find temporary housing with family before we could even qualify for a construction loan. They won’t give you a loan if you already have a mortgage, regardless of whether or not it looks like you can afford it. Construction loans have an interest rate that is about double the regular mortgage rate right now. I don’t really love talking about the financial aspect and this is the part that makes me squirmy. You should also know that many banks don’t even write construction loans any more because of the crash in the housing market a few years ago.

No matter what, don’t get discouraged. This is actually a great time to build because many great builders have space in their schedules and mortgage rates are unbelievably low.

I can’t wait to take you through the more fun parts as we go along!

You can see my inspiration boards if you follow me on Pinterest if you are interested.

UPDATE: Our house is finished! You can see it by clicking on my Our Home tab. If you are interested in building a custom home of your own, you might also want to check out: