Help navigating financials etc. of building a home.

[Archbishop]

So here's what I'm trying to work out any advice would be appreciated.
I currently have a house in the city, but I want to move to the country. I'm not opposed to buying an old farmhouse, but really it's taking quite a while to find what we want. I believe we could probably build one faster than finding a prebuilt. Hopefully about the same cost if do some of our own work and we stick to a budget. (Should also be able to make it much more energy efficient too.)

So my challenge is to sell my house. (Already have a few people interested.) Find a place to live, find a bank to work with, and build a house.
So the specific questions;
1. where to live in the mean time. Looking to build near Shelbyville, but we work in Indy. Maybe we could rent in Shelbyville?
2. Anyone know exactly what to say to a banker about a loan? We need a loan to buy land, and construction. If we sell our house right, we'll have no debt, (Other than my wife's student loans.) and we'll have money for a down payment.
3. As to building the house. On paper it looks like using a metal kit building as a home would save both time and money. Am I missing anything on this? Pros-cons?

Thanks in advance to anyone who can help with this.

 

[hoosierdoc]

Lot loans are very difficult to finance now since the latest real estate collapse, so be prepared to put 100% down on the lot.
I would sell your house first and then rent until you find a place you want to build. Living by the house you're building is a good idea so you can be a frequent presence and keep the contractors on their toes.

Not sure on the other stuff other than you do a construction loan. It's basically a line of credit and the builder takes "draws" at specific points in the build. You are paying interest only for each of those, and they are a kick in the teeth each time the builder asks for a draw. At the end you will "close" on the mortgage and take a mortgage out to cover the "construction loan/line of credit" and fully pay off the builder.

Watch out for "change orders" which is where you (really the wife ) wants something different than the builder and you guys agreed to. It's fee + 20% at least to make a change so really do your homework and decide what you want first.

Meet with your cabinet guy and choose your appliances before finalizing the plans for the home. Having a few inches here and there makes a big difference in the kitchen, and you need to know what you want where.

Good luck! (and don't rush!)

 

[ultra...good]

Having been through this a few times, the one thing I can tell you is the more money you have in your pocket, and the less you have to borrow, the better off you will be. Of course, you already knew that though.
If you really want to do this now, the one thing I would recommend is that you find the piece of land that you want, and have that paid for first. Even if that means you take out a loan, and then refinance to build the house. A construction loan is complicated and it will get worse if you do not have the land before you try to work out a loan for the entire package. The process of building a home is stressful enough. The simpler the better.
I have not done this, but know a few that have: Find the land you want, arrange for septic, well, electric, and then find a cheap mobile home to live in during construction. When the new home is finished, connect the house and disconnect the trailer. Not sure if that would work for your situation, but something to consider.
Lastly, the amount of stress that can come with building a home can do serious damage to a relationship. Do everything you can to avoid that.
Good luck to you. And as always, pictures are required.

 

[hoosierdoc]

Phenomenal advice on the relationship aspect. We built while my wife was pregnant and changing jobs

 

[remauto1187]

Phenomenal advice on the relationship aspect. We built while my wife was pregnant and changing jobs

You sir just beg for punishment AND torture, dont you?

 

[remauto1187]

I am also in the planning stages of building a steel frame home "kit" too. I can tell you from my research the main "drawback" is insulation. Thermal bridging of the steel frame causes heat to escape faster than in a traditional wood frame home. This can be alleviated by installing the highest R value you can afford in the walls (Im going with 2x6 steel "studs). The effective R value that you put in the walls is literally cut in half because of the thermal bridging. To make up for that aspect and end up with a higher than the typical R13 value found in alot of homes is "fixed" by installing foam sheet insulation on the outside as well. It will be between the sheathing and the siding. The effective R value of the outside insulation is 100% of the R value installed plus 50% of the wall insulation R value. So if you put R25 in the walls and R4 outside you will end up with an overall R value of R16.5. Insulation will cost substantially more for a steel frame home but this can easily be offset by us putting the frame together ourselves which saves on labor. This is the one I think I am going to go with. CSC Building Systems | NuShelter Classic Home NS7966 I will do everything in the construction of the home except for the concrete slab, drywall, under slab plumbing. Watch menards for 11% off and buy materials when you can. It doesnt hurt to put off the build until next year so you can save 11% on materials until the build next year. I am at a advantage since I have 5 acres in the country and want the new house back further off the street anyway. My current house is right upon the road. I will tear it down once the new house is finished. You can try renting a travel trailer or even spend a couple grand or so getting a junker trailer(mobile home) moved to the property to hold you over until the new house is completed. It will make life easier not having to drive alot to get to your new property to work on the new home. Dont forget to budget for HVAC, Septic tank(if needed), permits, electrician (if required in your county), electrical and gas hookup (utilities). Last but not least...Brick will add atleast 25-40% to the cost of the home! PM me anytime to compare info.

 

[jd4320t]

Farm Credit Mid America does home site loans and then they will roll that into the new home loan.

Home Site Financing | Farm Credit Mid-America

 

[Harleyrider_50]

Well ya got yer work cut out for ya.......pay close attn ta posts 3 & 4......can , an' WILL be azzkik'r.......if ya ain't careful.....

 

[spec4]

If you have the equity in your home you can get a home equity line of credit to buy the lot outright if you have adequate equity. (you should) You need to find a competent honest builder you can work with. I would want a guy who has built many similar homes in the area you are looking in. As stated above, know exactly what you want, hardwood vs carpet, tile, quality of kitchen and bath fixtures, etc. IMO some change orders are inevitable but can be minimized with proper pre-planning. In many situations building takes longer than you think it will and ends up costing more than you think. It is a test of the marital relationship, discuss this with spouse and be ready for it.

 

[Indy_Guy_77]

(If anyone wants a 100 y.o. fixer farm house out in the country on 2 acres near Defiance, OH... Let me know)... Ahem.

 

[ultra...good]

(If anyone wants a 100 y.o. fixer farm house out in the country on 2 acres near Defiance, OH... Let me know)... Ahem.

Ohio?? Wheres that??

 

[Indy_Guy_77]

Ohio?? Wheres that??

That's the buffer zone between us and Pennsylvania.

-J-

 

[Archbishop]

Well darn. Spoke to zoning today in Shelby county. You can't have chickens or small livestock on less than 6 acres of land. What's up with that. Here in Marion county you can have chickens even on a .10 acre city lot?

 

[hoosierdoc]

That's odd. Our HOA in Shelby county allowed 5 birds and they were 5.5a lots. Can you get a variance?

 

[Archbishop]

I can, but it adds an extra step to do before buying the lot. Specifically I was told if it's lot is listed as Residential it's 6 acres. If it's listed as Agriculture though it's only 5 acres.

That's odd. Our HOA in Shelby county allowed 5 birds and they were 5.5a lots. Can you get a variance?

 

[Archbishop]

Zoning in Hancock county says you can't build a house in the country unless you have 10 acres. Exception is if the plot of land was split prior to 2002.

 

[Archbishop]

I've called and talked to these folks. They seem like real good folks. I will likely end up going with them.
Standard loan is 15% down and up to 30 years. Unconventional, which is likely what I'm doing, is 25% down and only out to 25 years. Still good deal.

Farm Credit Mid America does home site loans and then they will roll that into the new home loan.

Home Site Financing | Farm Credit Mid-America