How We Built A Custom Home At 23 Years Old
We built our home at 23 years old. That’s not typical, and probably wouldn’t have happened if my dad wasn’t a home builder. We didn’t set out to build. We wanted to find something existing, and thought we had to wait until we could afford to build. We didn’t realize at the time that building a new home was just as realistic for us as buying an existing home.
After several months of looking and not finding anything we liked in the location we wanted with the acreage we needed (we wanted AT LEAST 5 acres because of our horses), we finally talked to my dad and then our local bank about building a new home. Once we did that, we realized it would be smarter for us in the long run to just build.
Let me start off by saying this: I know not everyone is lucky enough to have a dad who’s a home builder - that’s why we wanted to start this blog! I have absolutely no idea what we would have done if I didn’t have my dad to turn to and ask ALL the questions. Actually I do know what we would have done - we wouldn’t have built!
I think a lot of people are turned off of building their home instead of buying because it can be so overwhelming. There’s so much to be done before you even start the building process… do you buy your property first or get a construction loan first? How do construction loans even work? When do you find your builder? How do you find your builder? Do we draw custom plans or buy ready-made? How do you know what everything’s going to cost? What’s the timeline?
So. Many. Questions.
Fortunately for us, we had someone who could answer them for us! Not only has my dad been building homes for over 25 years, but my granddad was also a home builder, not to mention a financial guru and a Godsend while we were figuring out mortgage stuff.
We realized that very few people had access to the kinds of information that we had. We’re not experts by any means, but we are two young people who have been able to build a really cool home and stay within our financial goals framework.
I also think it’s important to note that we built a custom home in a rural area with no zoning restrictions or HOAs - if you’re building within city limits or in a subdivision, this probably won’t help you! But stay tuned for a future blog where I might be able to talk my dad and granddad into sitting down with me and answering some questions on that subject matter - they used to develop entire subdivisions!
Enough about all of that - here’s how we did it
1) Find A Builder
This was an easy one for us - my dad was the only one I wanted to do our home. It’s incredibly important to find a licensed home builder. A good way to do that is by searching online for your local Home Builders Association. Use their “Find a Pro” tool to search for someone in your area and then check out their websites to see their work. You can also use Houzz.com’s Find Professionals tool and see sample work right on the site. When contacting perspective builders you need to decide what level of involvement you want in your house. Many builders do semi-custom homes, where you choose from pre-existing plans and get to pick your finishes from a few pre-determined options, all the way to a fully custom home. Talk to your builder to decide what’s right for you and make sure you’ll know exactly what to expect. Our home is fully custom, meaning we picked out our plans and every finish in the house, both inside and out. We didn’t use a designer because I had a pretty clear vision of exactly what I wanted, but designers can be incredibly helpful if you’re just needing a second opinion or want someone to narrow down your options for you. See if your builder has a designer on staff or someone they recommend.
2) Find Your Property
We did things a little differently than most people might - we found the perfect piece of property before we were quite ready to start building. Instead of first getting a construction loan and then buying the property as part of that loan, we instead got a land loan to buy the property first.
There were a couple of reasons for this:
First, we hadn’t decided on plans yet, which means we didn’t have a budget. When you get a construction loan, lenders want to see your plans for building the home, including an estimated schedule and a budget. We wanted to take a little more time getting our plans exactly right instead of rushing through just to have it all lumped together in one loan.
Secondly, we needed to move quickly on our property. We had been searching for MONTHS to first find a home, then property in the right location and with the right amount of land. I said earlier we wanted at least 5 acres, but ideally we wanted more in the 15-20 acre range. We wanted the property to be somewhere we could grow into, not out of. There was just absolutely nothing on the market so when this place popped up we went and looked at it immediately (the same day it was put on the market) and had made an offer within the week. It was in the most ideal location, in the right school zone, and even had a pond! This all happened in October, and we had a goal to have our home built by early summer of the next year so we knew we were going to be on a tight timeline and needed the place fast.
3) Get Your Plans
Before you get your heart broken by finding the perfect home on Pinterest that is also 5000 sf and $400,000 outside of your price range, you need to talk to your builder about your budget. You’ve likely already been to the bank to get pre-approved but now’s the time to decide what you actually want to spend (word of advice - you probably can’t afford what the bank tells you that you can.) Your builder will be able to give you an estimate of cost per square footage based on your home goals. Once you have an idea of how big your house can or can’t be, you’re ready to look at plans!
There’s several ways you can go about getting home plans. The most cost effective and quickest way is to look at ready-made plans. See if your builder has any architects they typically work with. Most have websites with their pre-made plans that are searchable by square footage. We used Chip Hudson, who has worked with my dad for years! Because we knew exactly the style we wanted, I sent Chip some pictures of homes I loved, and he sent me some of his stock plans to look at as a starting point based off of what we wanted. I’ve got a whole blog post about how we designed our plans here.
You can also have plans custom drawn - just know that this is going to cost you more!
4) Get Your Construction Loan
Here’s the part where people get antsy. The Construction Loan. It can be scary if you’ve never dealt with construction loans before, because they work a little differently than a traditional mortgage. The biggest thing that Damon and I learned during the process of getting our construction loan - Don’t be afraid to ask questions, you’re not dumb if you have to ask your loan officer to explain things.
It’s also important to do your research and familiarize yourself with the process ahead of time!
Before you can get your construction loan, you’re lender will need to know who’s building your home, a copy of your plans, an estimated schedule, and the budget. They’ll send an appraiser your plans and your address, and that appraiser will let the lender know how much the home you’re planning on building will be worth based off of existing homes in the area.
Because we had bought our land prior to securing our construction loan, that loan was then combined into our construction loan.
With a construction loan, the lender pays the builder in intervals that follow each phase of construction. Each time the builder is paid from the lender is called a “draw”. The lender will usually come and check on the progress of construction during this process.
During construction, you only make interest payments on the money that has been “drawn” out of your construction account up until that point.
5) Start Building!
Once you’ve closed on your construction loan, you’re ready to start! It’s going to be fun, it’s going to be exciting… and you’re going to have to make a lot of decisions.
This is where a lot of people get overwhelmed and it helps to work with a designer. This is also the time to Pinterest your little heart out and decide what colors and overall look you’re going for! Your builder should have a price allowance sheet to help keep the project on budget, and you should talk with them at the start of the project to make sure you know what finishes your responsible for picking out, and when. You don’t want to hold up your build for a month because you forgot to pick out your tile backsplash and now it’s back ordered. Anytime you go to pick out finishes, make sure to know what your budget for those particular items are. Tell the sales rep as soon as you walk in what your price range is and that no, you don’t want to look at these over here that are just a little out of your budget. Sure, those Carrara Marble tiles are GORGEOUS but if you’re on a $8/sf budget they’re not for you, sis. (Trust me, I had my heart broken by a $40/sf marble tile…)
Another tip, take pictures and write down everything you pick out, even if the sales rep puts it down on the order sheet. You’d be surprised how often order sheets go missing or are unreadable, or the wrong thing is delivered. Make sure you know what you ordered and that what you ordered goes into your house.
6) Close On Your Mortgage and Move In!
As soon as you have a good idea of when your home will be finished, you’ll need to contact your lender so you can set up your closing on your mortgage. They’ll send out an appraiser to make sure the home that was proposed to them matches the home that’s been built, and then you’ll be able to close on your mortgage!
You want to do this as soon as possible so you can stop making your interest-only construction loan payments and start actually paying on your house.