home builders guide august 2012

AUGUST 2012

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2 Home Builders Guide • August 2012 I-75 NEWSPAPER GROUP • OHIO COMMUNITY MEDIA

A Step-by-

Step Guide to

Building Your Homeby Kirk Baruth

Wouldn’t it be nice if building your own home was as easy as constructing the toy houses of yourchildhood? You’d get out a set of plastic or wooden blocks and arrange them exactly the way you

wanted. If you weren’t happy, you could knock the whole thing down and start over. Unfortunately,there’s no Lincoln Logs kit for constructing a habitable dwelling. Careful planning, however, will ease

you through the process. Building a home isn’t child’s play, but taking the time to educate yourselfabout what you’re likely to encounter will keep you from going gray before your time.

Finding the perfect plan may be timeconsuming, but it’s key to the success ofbuilding a home. If you’re not in lovewith the final product, even if it’s only onpaper, you won’t be committed to seeingit through to reality. You may alreadyhave a picture in your mind of what yourdream home looks like. It’s important,however, to ask yourself a series of ques-tions that can help you choose a planthat works for you. The answers will pro-vide direction for finding the home youneed, not just the home you think youwant.

First, ask yourself a series of lifestylequestions. Are you single or married? Doyou have small children or will you in

the future? If so, will each child require aseparate bedroom or will they sharerooms? How many bathrooms are neces-sary to adequately fulfill the day-to-dayneeds of the family? Do you have parentswho may be living with you in thefuture? Do out-of-town visitors often stayovernight? Do you frequently work athome? How often do you entertain? Doyou require separate formal and informalspaces for different occasions? Theanswers to these questions may indicatethe floor plan that best suits the way youlive.

For example, answers to the first fewquestions help determine the number ofbedrooms and bathrooms you need, per-haps the most important element of afloor plan. If you have elderly parents orfrequently host overnight guests, youmay want to consider a floor plan with aseparate guest suite that includes a pri-vate bath or private access to a full bath.Answering the question about how oftenyou work at home can determinewhether a plan with a designated homeoffice, study or quiet computer alcove is asmart investment. Answers to questionsabout how you entertain can help youdecide what types of common roomsyou’ll need. If you enjoy entertaining on agrand scale, you may want a set of for-mal rooms (formal living and diningrooms or a library, for instance) that pro-vides the space and the proper atmos-phere for such occasions. If your enter-taining habits are more casual, you mayopt for a large family room adjoining an

open kitchen, instead. Many people todaychoose plans that feature a central GreatRoom, the character of which can changeto suit your entertaining mood, from for-mal to casual.

Next, ask yourself what kinds of activ-ities you enjoy. Are you an indoor or out-door person? If you prefer spending timeinside, choose a plan with features thatenhance your leisure time: a fireplace,space for media equipment, a hobby roomor a studio, or a gourmet kitchen. If youcan’t resist the call of the great outdoors,consider a plan with an open porch, ascreened porch, a deck, a terrace or someother space that functions as an outdoorliving room. Does the plan allow enoughlawn area for children to use for outdoorgames and sports? If gardening is yourpassion, consider the benefits of a planfeaturing a mudroom in close proximityto the utility room and a half-bath, per-haps. Or choose a floor plan that offersmultiple outdoor views overlooking yourhandiwork.

Finally, the geographicalfeatures of your lot, if you’ve already pur-chased one, may determine the homebest suited to it. A narrow lot usuallycalls for a design that rises up instead ofspreading out. A wide, shallow lot, on theother hand, is perfect for a one-storyrambler. A sloping lot offers you thechance to build a home with a daylight(walk- out) basement or an inconspicu-ous, tuck-under garage. For a scenic lot,you may want a design offering outdoorspaces like decks or porches that provide

a panoramic view. If you haven’t yetselected a lot, be sure to keep all of theabove factors in mind when doing so.

Chances are you’ll find the home thatfits your needs among the thousands of

designs HomeStyles offers. If not, youhave the option of modifying a plan soit’s exactly what you want. Modificationinvolves having an architect or drafts-man redraw part of your plan to incorpo-rate features that better suit your needs.Typical modifications include changingfoundations,

continued on page 3

Choosing a Plnn

Modifications

adding rooms, changing the exterior wallframing to accommodate environmentalconditions, and even going so far as tochange the exterior look of the design(Do you prefer a Tudor-style home over afarmhouse? No problem!).Homeplans Design

Services of St. Paul,Minn., modifies hun-dreds of plans everyyear, in addition toproducing originaldesigns. The averageprice of modifying aplan is $800 to$1,600, well worththe cost to get exactlywhat you want. (Bycomparison, the aver-age fee charged by anarchitect to designyour home fromscratch is 10 percentof the final cost of thehome, or $20,000 fora $200,000 home.)“In most cases,

individuals find aplan that is close towhat they are lookingfor but would like tomake some changesto better fit their spe-cific needs,” says JimVerhaest, director ofsales and marketingfor HomeplansDesign Services. “Wework with the clientpersonally to createor redesign the planin accordance withtheir design ideas and budget-relatedconcerns.”Companies like Design Services usual-

ly prefer to be contacted before you’vepurchased your blueprints.DesignServices associates offer free esti-mates; you can call them toll-free at 1-888-2MODIFY.Builder, the magazine of the National

Association of Home Builders, offers sev-eral tips for choosing a person or compa-ny to construct your dream home. Thefirst step is to find a builder. As withlocating any other professional withwhom you seek to establish a relation-ship of trust, the best referrals oftencome from friends who have built ahome. Ask them for recommendations, aswell as for the names of builders theyrejected and the reason. A local homebuilding association can provide you witha list of builders in your area, thoughmost, in an effort not to play favorites,won’t refer you to a specific builder. Youcan even check sources such as realestate agents, hardware store owners,loan officers at banks, or others who com-monly deal with the residential construc-tion industry. Builder offers its own pro-fessional directory accessible through itsWeb site (www.builderonline.com).Compile a list of potential builders,

then schedule visits and get a rough esti-mate from each. Take your house planwith you, and ask to see a portfolio of thebuilder’s work. At this meeting, it’simportant to get a sense of how youinteract with the builder. Is the individ-ual responsive to questions, and does heor she provide information without youasking? Remember, your builder will beyour best friend during the constructionof your home. If you get an uneasy feel-ing from the start, chances are you’ll alsohave problems down the line, when com-munication will be vital.Choose up to five builders and ask

each to submit a final bid. To do so,they’ll need a list of the specific prod-ucts—from faucets to kitchen counter-tops to windows—you want used in theconstruction. Make sure that eachbuilder is working off the same set ofblueprints and the exact same list of fin-ishing materials, or you’ll end up withskewed bids. When the bids come in,don’t necessarily discount the highestand assume the lowest is the one youwant. Some builders low-ball an initialbid and are then forced to cut corners tomeet the budget.Just as important as the builders’ bids

are their reputations. Builder magazinerecommends making sure that each ofyour potential choices is sufficientlyinsured, bonded and licensed.Requirements vary by state, so checkwith the state agency responsible for reg-istering builders (in most states it’srequired), and see if your candidatesmeet the basic criteria. Don’t be afraid toask for proof from the builder; a builderwho has nothing to hide will producesuch documentation willingly. A statelicensing agency or a local chapter of theBetter Business Bureau will be able totell you whether builders have ever hada complaint filed against them. Talk withpast clients, too, and find out about theirexperience with a particular builder.Make sure to visit a home that was com-pleted in the not-too-recent past to seehow it’s holding up. After all the informa-tion is in, choose the builder that bestmeets your criteria.Choosing an institution to finance your

new home won’t be nearly as hard aschoosing a builder. However, if it’s yourfirst home loan, you may feel lost in themaze of banking jargon you encounter.Don’t worry. As with the rest of thehome- building process, remember thatothers have made it through, and youwill too.To start, remind yourself of something

your grade school teacher used to say:there are no stupid questions. No oneexpects you to be an expert at financingor building a home, especially if it’s yourfirst, so ask questions. Doing so may evenhelp you avoid costly mistakes. Follow

another of yourteacher’s instruc-tions: take notes.Write down themeanings of termsthat are new toyou, or that youwant to get moreinformation on at alater time. Manybanks even offerhandouts explain-ing the language offinancing. If theydon’t, ask for one;the chances aregood that loan offi-cers have some-thing they can pho-tocopy from aresource book theythemselves use.The first step in

financing yourhome is deter-

mining how muchyou can afford. Therule of thumb isthat your mortgageshould be no morethan 2–21⁄2 timesyour annual salary.Another stan-

dard dictates thathomeowners spendabout 38 percent of

their annual salaries (after taxes) ontotal housing costs—including mortgage,insurance and utilities. Remember totake into account your changing financialcircumstances over the life of the loan(up to 30 years). Do you expect yourincome level to remain stable, increase ordecrease? Do you have young children, orwill your family be expanding in thefuture? Will education costs affect yourfamily over the course of the loan? Agood loan officer will review all these fac-tors with you.Your loan officer will also ask to see

certain financial documents. These couldinclude the purchase contract for thehouse, bank account numbers, bankbranch addresses, recent bank state-ments, pay stubs, W-2 forms, informationabout all loans, debts and credit cards,mortgage or rental payment receipts anda Certificate of Eligibility from theVeterans Administration if you want aVA-guaranteed loan. If you are self-employed, the lender may also want toreview business tax returns and balancesheets from the past two or three years.It’s likely that you’ll end up with one

of two types of mortgages. Perhaps themost common in the past has been the30-year fixed-rate mortgage (FRM),which carries the same interest rate andthe same monthly payments throughoutthe life of the loan. FRMs are also avail-able in 15-year terms. The 15- year mort-gage carries a higher monthly rate, butthe amount you pay in interest is lowerover the life of the mortgage.Because interest rates fluctuate from

week to week and even from day to day,the rate a lender quotes when you areshopping around could be very differentfrom the rate available when you final-ize. Those rates can also increase afteryou apply for the loan, but before final-ization. A few percentage points can dra-matically increase (or decrease) the totalinterest you pay over the life of the loan.Many lenders offer a lock-in on a quot-

ed interest rate and sometimes on thenumber of points quoted. (A point equalsone percent of the amount borrowed.Lenders often charge points to increasethe yield on a mortgage and to cover loanclosing costs.) The lock-in ensures that ifinterest rates increase before finaliza-tion, the borrower can still secure theloan at the terms previously discussed.Lenders often charge a fee for the lock-in,which lasts for a pre-determined time—usually between 30 and 60 days.An increasingly common type of home

financing is the adjustable-rate mortgage(ARM), so called because the interestrate adjusts periodically throughout thelife of the loan. Many lenders advertiseARM interest rates that are much lowerthan those for fixed-rate mortgages.Those rates often last for a short timeand, after that initial period, the ratesare adjusted on a regular basis. The timebetween rate changes—called the adjust-ment period—is usually one year. Three-and five-year adjustment periods are alsoavailable.An ARM allows you to take advantage

of low initial rates. If interest rates dropover the life of the loan, you could alsosave money over an FRM. However, ifinterest rates rise, you could end upowing more than you would have underan FRM. Before assuming an ARM, eval-uate how your finances will change inupcoming years. Can you afford monthlypayments that could be higher thanthose you started with? A federally man-dated cap on ARMs may help, but youshould still work with your loan officer tofind the type of mortgage that’s of mostbenefit to you.Now comes the fun part. After you’ve

selected your plan, hired a builder andsecured a mortgage, your dream homebegins to take shape before your eyes.This is no time to sit back and take it

easy, however. The final touches, the littleparts of yourself that make a house ahome, have yet to be applied. It’s at thispoint that you’ll need to ask yourselfwhether hiring an interior designermakes sense.The expertise of a certified interior

designer extends far beyond aesthetics.In addition to space planning, lightingdesign, color coordination and the selec-tion of materials, furnishings, fixturesand finishes, interior designers possess aworking knowledge of interior construc-tion, fire and building codes, and safety,energy and environmental issues.When seeking an interior designer, you

may want to consider working with aprofessional with membership in theAmerican Society of Interior Designers(ASID).This organization represents the high-

est level of interior design professional-ism, and its membership requirementsare demanding. An applicant must fulfilleducational and/or practical experiencerequirements, be engaged in professionalpractice, and have completed theNational Council for Interior Designqualifications exam. ASID offers an on-line nationwide referral service(www.asid.org) as a valuable startingpoint.Request from

all potentialdesigners a listof three to fourprevious clients,and ask theclients abouttheir satisfactionwith the design-er’s work andworking style.You shouldschedule a meet-ing with thedesigner toreview a portfo-lio of past workand to discussexpectations.Inquire aboutthe designer’seducation, train-ing, experience,professional affiliations and other cre-dentials. He or she will explain thedesign process and how design servicesare charged. Ask about available servic-es, cost estimates and what the designercan do to maximize your budget.Whether you decide to consult a pro-

fessional or follow your own intuition,good planning and a realistic idea of

what you want to accomplish will helpyour interior design project immensely.First, identify your likes and dislikes. Aknowledge of your own tastes is essentialto creating an interior you love. Gothrough your current home and identifythe items that do and don’t work for you.Note pieces of furniture, antiques, specialobjects and anything you want to keep,so you and your interior designer canincorporate these objects into the newdesign. Then, peruse how-to books andyour favorite magazines for ideas ondesign style and technique. Visit furni-ture stores, department stores and modelhomes for additional ideas and inspira-tion. Take pictures of what you like.Perhaps most importantly, make surefamily members agree on the plan beforeyou start spending money on furnishingsor interior design fees.Take a step-by-step approach to your

design project. Decide how and by whomeach space will be used. Matching yourdesign to the way you live is essential.Whether a room is to be used for relax-ation, entertaining or work, its use willdetermine its design and the elementsthat go into it. Remember to be realisticabout the size and scope of the spaceyou’re considering, and choose a designthat reflects the mood you want to create

while meetingyour functionalneeds.Examine the

special featuresand the possibleshortcomings ofthe room in ques-tion. Is the ceil-ing too low or theroom drab? Doyou need morestorage space or aspecial computeror hobby area?After you’veanswered a fewbasic questionsand criticallyassessed yourneeds, you’ll havea specific idea ofhow to proceed.

Find a focus for each room—a corner-stone upon which to build the design anddecor of the rest of the room. If the roomdoesn’t have something that naturallydraws the eye, such as a picture windowwith a great view, you can substitute astriking piece of furniture or a group ofsmaller elements, such as flower

continued on page 4

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arrangements, to create a focal point.Finally, decide what you really want andwhat you can live without. Go to storesand price the design elements. Develop alist of priori-ties thataddressesyour mone-tary andtime limits.Also keep inmind sizelimits for fur-nishings.Make a gridon a sheet ofgraph paperof the roomyou’re work-ing on; onesquare onthe papershould corre-spond to asquare foot offloor space.Sketch indoors, win-dows, heat-ing and cool-ing outlets,and anyother fea-tures of thespace thatdeterminewhere youcan place fur-niture. Then, take both your floor planand a tape measure with you when shop-ping. A couch that looks just the rightsize in a spacious showroom can over-whelm a modest-

sized area. Remember that certaindecisions

regarding your interior layout must becompleted early in the planning process.

Kitchensandbaths,especially,requirethe order-ing ofappli-ances,counter-tops,faucetsand fix-tures thatmayinfluenceabuilder’sestimateof howmuch itwill costto con-struct thehome.

A satis-fyingbuildingexperi-encehinges onyour abil-ity to beproactive

rather than reactive. In this endeavor,more than any other you may undertakein your lifetime, forethought is crucial.Careful planning is the key that willunlock the door to your dream home.

“How to find the Right Builder,” Builder Best Home Designs, Mid-Spring 1991; LauraLentz, “Interior Definers,” and Jessica Tolliver, “Realize Your Dreams: A Guide toFinancing Your New Home,” Homeplans, part of Move; Jim Verhaest, HomeplansDesign Services

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HOW MUCH

HOUSEHOW MUCH

HOUSECAN YOUAFFORD?

CRUNCH THE NUMBERS

Have a number in mindbefore meeting witha builder or architectby Tom Stephani

One of the first steps in the home-building process isto investigate and analyze your financial situation andfind out how much money you’ll have available for theconstruction and purchase of your custom-built home.It’s generally a smart move to make some prelimi-

nary financial arrangements before you begin inter-viewing builders or architects and before you purchasea site for your new home. Without a budget in mind,you won’t be in a good position to make those otherimportant decisions.Check Out LendersAsk several lenders to explain the loan products they

offer. Loan programs and qualifica-tion requirements are constantlychanging, so it’s important to findout what options are available toyou. Many home buyers are sur-prised to discover they can qualifyfor a larger mortgage than theythought they would be able toobtain. Others are disappointed tolearn their dream home is finan-cially out of reach, at least for awhile.Before you begin consulting

lenders, obtain a copy of your creditreport and contest any errors in it.Cleaning upyour report ahead of time will

position you in the best possiblelight to borrow money. Be preparedto explain any negative informa-tion in writing.Ask at least one lender to pre-

qualify you for a mortgage. Thelender will ask you some questionsabout your income, your debts, andyour credit history, then use thatinformation to give you a reason-ably reliable estimate of your borrowing power. Pre-qualification is usually free. It doesn’t obligate you toobtain a loan from the lender, nor does it obligate thelender to provide a loan for you. Withholding informa-tion from the lender isn’t in your best interest becausewhatever you don’t reveal almost always will be uncov-ered when you submit your formal mortgage applica-tion.Decide What You Can AffordAfter the lender gives you an estimate of your bor-

rowing capacity, sit back for a while and assess yourown comfort level. There is no reason why you must

borrow the maximum amount for which you can qualify.Take a realistic look at how much you are willing tosacrifice in order to afford your new home.The total amount of cash you’ll need at hand to build

your new home depends in part on the scope of theproject. For a production or tract home, the amount ofcash you’ll need to get started isn’t much more or muchless than you’d need to purchase an existing resalehome. In fact, a small deposit may be the extent ofwhat’s initially required. For a custom or semi-customhome, you’ll need a substantial amount of cash prior toobtaining your construction financing.

Builders suggest budgeting at least $5,000 to$10,000, depending on the anticipated size of yourhome. These up- front expenses are part of the totalproject cost and often can be “reimbursed” to you inyour construction loan or considered to be a portion ofyour down payment.The building process involves a number of expenses

you’ll need to incur before your construction financingbecomes available. These expenses might include adeposit on purchasing your building site, preparation ofthe plans and specifications for building your home, siteengineering, various government building fees, loan

application fees, and a deposit on the builder’s servicesor any preliminary fees payable to the builder.Most builders require a down payment of at least 20

percent of the total cost for a custom or semi-customhome. Many buyers put down as much as 50 percent ofthe total. Sources of down payment funds might includeequity that has accumulated in your current home, sav-ings, other liquid investments, equity in the site foryour new home (if the land has already been pur-chased), or other investments that will be liquidatedprior to the start of construction.If the equity in your existing home will be the pri-

mary source of your down pay-ment on your new home, you willprobably want to obtain a realis-tic estimate of the market valueof your home and estimate howlong it will take to sell yourhome.KnowWhatYourHomeIsWorthInterview several well-quali-

fied real estate agents who arefamiliar with your neighborhoodand ask each to give you a com-parative market analysis (CMA)for your home. Selling your cur-rent home before constructionbegins on your new home can bea stress-reducing strategy eventhough you may have to movetwice. Trying to time the sale ofyour current home to coincidewith the completion of your newhome will be nearly impossibleand highly stressful.During the design and con-

struction phases of building yournew home, you’ll be presented with countless opportuni-ties to upgrade every component from the roofing mate-rials to the kitchen cabinets. Having a cash reserve oradditional borrowing capacity will enable you to includethose upgrades that will make your home truly specialfor you. If you max out your budget on the basic home,every decision about options and upgrades will beexcruciating.Setting an appropriate budget is one of the most

important steps in the home-building process.Approaching budget constraints realistically can helpset the stage for a rewarding home-building experience.

It is important when buildinga new home to examine yourfinancial situation and find outwhat you can really afford.Meeting with several lendersand finding out what you’requalified for will help youget started.

Do the math with these easy-to-use calculators foundat www.homeplans.com in the section titled“Home Dollars and Sense”:

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Congratulations! You’ve decided it’s time to build the home of your dreams. You envision ahome that will be beautiful, comfortable, and well constructed—a lifelong haven where youand your family will create lasting memories. But how do you achieve all of this and still staywithin your budget? Let’s take a look at some of today’s top money-saving strategies for build-ing a new home.

Create a checklist,and stick to it

Before settling on a design, take time for an honestevaluation of your needs: Which rooms would yourfamily use regularly, and which would sit empty orunused? What amenities are necessary and practicalfor your lifestyle, and what would be over the top?Creating a checklist of your new-home needs willhelp keep you organized and focused on the necessi-ties as you search for that perfect plan.

Pick the right plan

How can you save money while you’re pondering which home planto buy? By paying close attention to the designs—both the exteriorsand the floor plans.

• Look for a plan without unnecessary jogs and angles on the exterior,which will add to the cost.

• Complicated rooflines—intended to add “visual interest”—will alsoadd to your bottom line. Opt for a design with simplified truss and fram-ing systems, which will save you money from the start.

• If you love volume ceilings, look for two-story—or at least consistent—ceilings, rather than staggered heights throughout a floor plan.For volume, specify truss systems that create tray ceilings, giving theeffect of higher ceilings without requiring taller walls, which drive upyour costs.

• Choose a floor plan that uses leftover space smartly. Common solu-tions to this problem are niches, alcoves, and extra storage spaces likecabinets and closets.

• Straight-run stairs are easier and cheaper to build than double-backs(U-shaped) or curved stairs.

• Does the plan you’re considering allow for plumbing runs to be shared;for example, are bathrooms situated back-to-back? This will save youmoney up-front and in potential maintenance costs.

• Remember that bigger isn’t always better. Embracing smart designover more square footage will save you money and make your homemore livable.

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1

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Start smart

While it may seem obvious, making smart financialdecisions is one of the best ways to save money inthe home-building process.

1Credit countsLong before choosing a lender, make sure yourcredit is in order; most experts suggest you dothis at least six months before you apply for aloan. This means optimizing your credit cards,paying off as many debts as you can, and savingas much money as possible for a down payment.Postpone any big-ticket purchases until after yousecure your mortgage.

2 Find the right lenderShop around for the best deal. Create a work-sheet comparing the options available from eachlender you consider, and remember that not alloffers are as good as they look. In particular, askfor and compare each one’s Annual PercentageRate (APR), which should include not only theinterest rate on your mortgage, but also the costsassociated with applying for and securing theloan you want. Even though one lender may offera lower interest rate than the rest, the hiddenadditional costs may increase your overall mort-gage payments in the long run.

3Warranties: Know what’s coveredLike any product, your home comes with a war-ranty, which should prevent any unpleasantsurprises in the first years after you move in. Allwarranties have limits. Ask about the standardsto which your builder will adhere when determin-ing the validity of warranty repair requests. Makesure that you understand and make good useof your warranty coverage, as part of yourhome-care plan.

Did you know?

Energy-Efficient MortgagesAvailable through both government-insured and conventional loanprograms, energy-efficient mortgages (EEMs) enable the borrower totake out a larger loan to cover the up-front costs of adding energy-efficiency features to their home. The money you will save on month-ly utility bills is considered when determining the mortgage loanamount.

Tax TipTalk to your tax preparer each year about any consumer tax creditsthat may be available for energy-efficient home improvements.Credits for solar water heaters and solar panels have been available,and additional incentives may be coming soon.

Learn more! Visit the Finance section of our ArticleLibrary at www.homeplans.com/rdr/finance.

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Tips for lowering your energy bills

There are numerous ways to save money on energy bills for yournew home. Although some may require an up-front investment, thelong-range return is worth it—for your pocketbook as well as for theenvironment.

• Consider building with insulating concrete forms, whichcan save you 25 to 50 percent in energy costs over tradition-al wood- or steel-framed homes. As an added bonus, theymake your home quieter and better protected from the ele-ments as well.

• Look into alternative energy sources for heating and cool-ing your home, which can dramatically reduce energy costs.Geothermal systems, micro-hydroelectric systems, and windgenerators tap into the free, renewable energy provided bythe earth’s heat, water, and wind sources.

• Make sure insulation is properly installed throughout yourhome to help keep temperatures stable and reduce energyloss. Ask about an insulation’s R-value (thermal resistance);the higher it is, the more effective it will be in reducing airleakage and energy escape.

• Install high-performance windows. Multiple-paned windowstrap air between the panes of glass, acting as an insulator.These insulating windows help prevent heat transfer, whichtranslates into increased energy efficiency.

3

Learn more! Check out our article “Earth, Wind, and NoFire: Harness the Elements to Energize Your Home” atwww.homeplans.com/rdr/energy.

building a high-qualityyet affordable home

• Consider installing a tankless water heater.This device heats water in as little as fiveseconds as you use it rather than heatingand storing water all day and all night. Whenthe hot water faucet is turned off, the systemshuts down and wastes no energy.

• Opt for ENERGY STAR qualified products,which meet strict energy-efficiency guide-lines set by the Environmental ProtectionAgency and the U.S. Department of Energy.These include appliances, heating and cool-ing systems, home electronics, office equip-ment, and lighting.

• Add solar collector panels on your roof tohelp heat your home—and some of yourwater—naturally.

• Install energy-saving, compact fluorescentlight bulbs. Such bulbs can use 75 percentless energy than standard bulbs while last-ing 6 to 10 times longer.

• Eliminate “standby” electricity loss byunplugging appliances when not in use.This includes VCRs, cable boxes, comput-ers, and printers. Group appliances neareach other and plug them into one surgeprotector or power strip, so it’s quick andeasy to unplug several items at once.

• Put your thermostat on a timer. This ensuresthat you don’t heat or cool the home exces-sively when no one is home during the day,or when everyone is asleep at night.

• Install a low-flow showerhead. This couldcut your water consumption for showers byas much as 50 percent.

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Look to the future

Selecting a plan that can adapt to your changing needs will help youavoid costly modifications down the road.

Expandable PlansConsider choosing an expandable plan that provides areasto be finished later, such as an unfinished basement or abonus room over the garage. Allowing for future space givesyou room to grow without breaking the bank. It’s muchcheaper to build a home with unfinished areas than it is toadd on a room at a later date.

Accessible PlansThink about how your needs might change as you age, andchoose an accessible plan to accommodate them. Main-floor master suites or one-story homes eliminate the need togo up and down stairs. Barrier-free designs are wheelchair-accessible with wide doorways, pathways, and accessramps. Look for adjustable-height shelving and workstations,roll-in shower stalls with seats, and walk-in tubs.

Plan search tip: Browse hundreds of expandable, barrier-free, andone-story homes at www.homeplans.com. Simply click on “MoreSearch Options” and enter your search criteria.

Get involved!

Consider applying the home’s finishing touches yourself, such aspaint, wallpaper, and landscaping, to put your mark on the processand cut costs. And remember, there are almost always lower-costalternatives for the products you love but can’t afford.

Learn more! In his new book Home Plan Doctor,award-winning designer Larry W. Garnett explainshow to navigate every stage of the new home designprocess, from selecting a plan to evaluating the suit-ability of the design room by room. Order your copy atwww.homeplans.com.

Proper planning is one of thebest ways to ensure your newhome’s quality and value.Above all, establish good com-munication with your builder.Your participation and inter-action throughout the buildingprocess, whether through“sweat equity” or by regularlyscheduled, on-site meetingswith your builder, can helpguarantee quality and saveyou money.

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Once you’ve gotten through the initial stages of thehome design process, you may think your part is over. Itisn’t. You’ll need to gather information, talk with yourbuilder and make weighty decisions that affect allaspects of your new home. Proper planning is one of thebest ways to ensure your new home’s quality and value.Before you break ground, follow these tips to prepareyourself for this risky but all-important first step:1. Above all, establish good communication with your

builder. Make sure that this person is someone youtrust and can address frankly. The home you are pur-chasing will becrafted before your eyes, so there is a great deal of

pressure on the builder— and high expectations fromyou—for the final product. It is essential that you meetin the middle.As an initial topic, discuss your roles and responsibil-

ities throughout the process. Talk with your builderabout who will take care of permits, insurance, tempo-rary utilities (power, water, etc.), contingency plans,inspections and other regulations or local requirements,plus any fees associated with them. Set up a paymentschedule on which you both agree. Make sure you putin writing who will be responsible for what and bywhen, so that you avoid ugly legal disputes in the end.To be on the safe side, it’s a good idea to consult yourattorney about particulars you may have forgotten.Next, determine a specific time frame in which con-

struction will be completed. Though your builder willwant to provide you with the most accurate estimatepossible, factors like weather conditions, labor short-ages and permit delays may hinder the process morethan either of you would hope. Also, the longer it takesto pull pieces from the initial stages together—detailswhich should be finalized six to twelve months beforebreaking ground—the longer it will take to completethe project. Establish a general time frame with yourbuilder and continue to inquire about the target com-pletion date, but don’t be surprised if delayscreep up because of unforeseen circumstances. On

the other hand, be aware of preventable delays and beready to call your builder to task if necessary.2. Having established a rapport with your builder, it’s

time for the “dirty” work. Before you begin digging upthe lot, you will need to obtain a soil report, which sum-marizes the lot conditions and assesses the surroundingenvironment, while suggesting the proper foundationfor your home. A soil test takes about a day, and may beperformed by your builder or an engineer you hire; gen-erating a report can take up to a week.3. Assuming the foundation shown in your blueprints

suits the site, your builder (or engineer) will survey thelot to determine the best placement of the home. Thiswill determine the parameters of your home’s footprint,as well as its prime location with respect to sunlight,ground conditions and landscape features. This shouldonly take about a day to complete. Make any necessarychanges to your plans now, including drawing a newfoundation, reversing the layout, converting the exteri-or wall framing or adjusting the window placement.These tests and modifications are important for thenext step: securing a building permit.4. With some exceptions, breaking ground requires

that you obtain a building permit from your local build-ing department. In most cases, your builder will takecare of this step and include any fees in your final

building costs; however, the application process requiresmany documents from you, so your direct involvementmay be helpful (see sidebar).Typically, but depending on the amount of construc-

tion taking place in your area, you will receive a permitwithin a few days of applying, but plan for two weeks,to be safe. Any changes that the building departmentofficials specify for your plans are mandatory and non-negotiable, and should be made immediately. Majorchanges may require additional approval before theycan be implemented.If you belong to a homeowners association, you may

require additional approvals for your proposed blue-prints, building materials and/or lot choices. Make sureyou are aware of these requirements, and complyaccordingly.Obtaining final approval means that, for all practical

purposes, you may proceed with your building plans.Routine inspections arranged by your builder willensure that the construction of your home continues tomeet local codes throughout the process. (Your buildershould keep an inspection card listing a record ofinspections and subsequent approvals, in order toexchange this card for a certificate of occupancy oncethe home is complete.)5. Now begins the process of preparing your site.

First, it may be necessary to level the lot before layingthe foundation. You may have to remove trees, rocksand debris that otherwise hinder your ability to buildin that area, so discuss with your builder how you wantthese items to be discarded. Think carefully about theremoval of trees—while some may interfere with power

lines or with the growth of other plants, others will addbeauty and value to your property and are worth keep-ing, if feasible.6. Next, your builder will stake the house using bat-

ter boards and taut lines to form its general outline, aprocess that generally takes a day or two, depending onthe size of your home. He or she may choose to do a“rough stake” that is less precise and allows for moreaccurate adjustments after excavation has begun; if so,this process may add another day to the overall timeframe, but it could be worth the extra effort. Be carefulnot to disturb these lines when you visit the site!7. At last, you have reached the point of ground-

breaking. Excavation of your site will begin within theparameters established by the stakes. Removed topsoilwill be deposited elsewhere on your lot and eventuallyused to shape the grade of the site. Utility lines thatconnect your home to water, sewer and power resourceswill also be installed at this point.Just because construction is beginning doesn’t mean

you can just sit back and watch it happen. Your partici-pation throughout the building process, whetherthrough “sweat equity” or by regularly scheduled, on-site meetings with your builder, can help guaranteequality and save you money.While contracting your own home can save you thou-

sands of dollars, it is generally just as efficient—and ifyou have less experience, more practical—to hire some-one else to do it. You may, however, apply the finishingtouches, such as paint, wallpaper and landscaping, toput your mark on the process and cut costs. Carefullychoosing products that suit your needs without break-ing your bank account can save you money in the longrun. There are almost always lower-cost alternatives forthe products you love but can’t afford. Manufacturedstone, for example, easily replaces heavy, expensive andhard-to-find natural stone, with essentially the samelook.By researching your options before and during the

building process, and staying well informed of thehome’s progress, you can avoid making costly mistakeswhile protecting your investment.Sources: Binsacca, Rich; The Home Building Process:

Everything You Need to Know to Work withContractors and Subcontractors; Tucson, Ariz.: HomePlanners, LLC, 1999. Smith, Carol; Building YourHome: An Insider’s Guide; Washington, D.C.: HomeBuilder Press, 1996.Resource: www.move.com

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• Permit application form

• Site plan (2 copies)showing the houseplacement, easementsand setbacks

• Complete set ofblueprints (2 copies)

• Engineered trussdrawings (2 copies)

• Soil report (2 copies)

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Shape(walk-through, L-shaped, U-shaped)

Island � �

Breakfast/ Snack bar � �

Planning desk � �

Walk-in pantry � �

Formal living room � �

Formal dining room � �

Great Room � �

Hearth room � �

Den or family room � �

Recreation room � �

Study/ Library � �

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In-law or guest suite � �

Media room � �

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Whirlpool tub � �

Shower stall � �

Number of sinks

Private toi let � �

Main-f loor location � �

Access to outdoor area � �(porch, deck, patio)

Fireplace � �

Walk-in closet(s) � �

Sitt ing room or area � �

Laundry room location(basement, main floor, upper floor)

Fireplace � �

Woodstove � �

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Number of car stalls

Attached � �

Front-, side- or rear-entry

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Dream HomeCurrent HomeFeatureSome people believe in love at first sight. For them, findingthe home they’ve always dreamed about is simple: They

believe that they’ll recognize the perfect home the momentthey see it. Others prefer a more calculated approach. Forthem, we’ve created a checklist that can be used as a guide foridentifying the home that best fits the way they live.

When you shop at a grocery store, you likely prepare a listbeforehand of the items you want to purchase. The reason forthis is twofold:

1. The list reminds you of exactly what you need so youdon’t forget anything.

2. The list keeps you focused on the necessities so youdon’t waste time needlessly wandering the aisles.

We recommend compiling a list and referring to it as youbrowse this magazine or online at homeplans.com. Youprobably have a general idea of the features you want toinclude in your new home. Creating a list can help you torefine your choices, so that as you begin searching, you’re sureto focus on homes that meet your criteria.

Use your completed list as a bookmark to make sure youdon’t misplace it, and keep a pen or pencil handy so you can jotdown notes or even refine the list as you search. You may evenwant to create an electronic version that is available as yousearch through plans online at homeplans.com. Begin by fillingin information about your current home; then create a parallellist of the features you desire in your dream home.

creat a wish listYour dream home begins with a checklist.

Making a listcan help youfocus on yourpreferences

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F inancing can be a con-fusing aspect of build-ing a new home because

custom-home buyers need toobtain both a constructionloan and a residential mortgage.

The construction loan acts as a short-term line of credit while the mortgage sup-plies funds on a long-term basis with anamortized payoff.

It’s wise to investigate your borrowing capacityprior to embarking on the home-building process,but you probably won’t need to secure your

financing until you’ve pur-chased or reserved the site foryour new home, approved the

design, building plans andwritten specifications for

your home and signed a con-tract with the builder.

How Construction Loans WorkFew subcontractors and suppliers can afford towait until your home is completed for payment for

the labor,materials orp roduc t sthey haveprovided.

That’s whereyour con-struction loanwill come

into the process.This credit line is used to pay thesubcontractors and suppliers on a

timely basis during construction.Once each month or as specific

stages of construction are completed,you or the builder will prepare a request

for funds called a “construction draw,”which is submitted to the lender or the titlecompany to pay for work completed thus

far. Partial payments may be made tomajor subcontractors whose workextends through several stages of thehome-building process.

Subcontractors and suppliers typicallyagree to waive their lien rights against the homeupon payment. Most lenders will require that you

pay for extras and changes as those expenses areincurred. Expect to pay a portion of thebuilder’s overhead and direct job expenseswith each draw, unless your contract with

the builder states otherwise.Although it seems counterintuitive, you

must apply for a residential mortgage and have thelender’s commitment for that loan in hand beforeyou will be able to obtain a construction loan.Very few lenders will approve a construction loanwithout being assured that a “permanent” mort-gage will pay off or “take-out” the constructionfinancing when the home is completed.

Get Your House in OrderThe extensive documentation required for both

the construction and mortgage loans will includeverification of your employment (e.g., W-2 formsand paycheck stubs) or documentation of yourself-employment income, verification of yourassets (e.g., savings and investment account state-ments), your income tax returns for the last two orthree years, your construction contract with thebuilder, the plans, specifications and cost break-down for building your home and the purchasecontract for or title to the site where your homewill be built. The construction loan lender willrequire a “take-out commitment” letter to verifythat you’ve applied for and obtained a “perma-nent” mortgage.

If you obtain both loans from the same lender,you might be able to minimize providing duplicatedocumentation; however, construction and per-manent loans usually are handled by differentdepartments, so you may still need to provide twocomplete sets of documents. It can be beneficialand easier to deal with one lender for both loans,but that’s neither required nor always the bestoption.

Lenders are beginning to make construction-to-perm loans, which wrap both parts of thefinancing into a single financing package. Theconstruction loan simply converts to a permanentmortgage when construction is completed.Although construction-to-perm loans can workwell, they aren’t necessarily the best option forevery situation.

Try to obtain the best rate and terms availablefor your long-term mortgage, regardless ofwhether it’s connected to a short-term construc-tion loan. Once you have a commitment for amortgage, a construction loan should be relativelyeasy to obtain.Copyright by Move, Inc.

Not many people have a pot of gold to finance theconstruction of a new home. For most of us, a con-struction loan and a mortgage are needed to providethe necessary funds. Securing financing isn’t difficultas long as you know what you are looking for.

Findingthe

FundsNegotiatingthe mazeof homefinancingoptionsby Tom Stephani

While it is recommended that you consult with aadvisor before making any financial decisions

help you estimate the funding details of your real estto visit www.homeplans.com and click on the “Howafford” link. Enter your monthly income and expensethe calculator will give you an estimate of the monthlment you can afford.

If you want to know what your monthly paymentcific mortgage amount, click on the “Mortgage paylink and enter your home’s purchase price, your dowannual property tax and insurance charges to bring bac

Try Our Online Calculat

Try Our Online CalculatorsWhile it is recommended that you consult with a qualified financial advisor before making any financial decisions, a quick wayto help you estimate the funding details of your real estate transaction is to visit www.homeplans.com and click on the “Howmuch home can I afford” link. Enter your monthly income and expense information, and the calculator will give you an esti-mate of the monthly mortgage payment you can afford.If you want to know what your monthly payment will be for a specific mortgage amount, click on the “Mortgage paymentcalculator” link and enter your home’s purchase price, your down payment and annual property tax and insurance charges tobring back the number.

Not many people have a pot of gold to financethe construction of a new home. For most of us,a construction loan and a mortgage areneeded to provide the necessary funds. Secur-ing financing isn’t difficult as long as youknow what you are looking for.

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Americans are in love with remodeling. Televisionnetworks such as HGTV and DIY run 24 hours a daywith shows like “BATHtastic” and “Design Star.”Magazines, websites and blogs feature happy homeowners gushing over perfect room makeovers. Andwith the continuing challenging economy,more homeowners have decided to stay in their current homelonger, which has created higher demand for remod-eling.A survey released by the National Association of

Home Builders (NAHB) in 2012 shows that commonremodeling projects have increased, compared to asimilar survey from 2010. And nearly 50 percent ofremodelers report seeing an increase in the numberof home owners who un-dertake remodels toavoid moving, comparedto the 2010 findings.Bathroom and kitchen

remodeling remain thetwo most common typesof jobs, as they havebeen consistently since2001. After 2009, how-ever, bathroom andkitchen remodelingswitched places—bath-rooms became the mostfrequent type of job forprofessional remodelers.Seventy-eight percent ofthe survey respondentscited bathroom remodel-ing as one of the mostcommon jobs, an all-timehigh.Home owners are fre-

quently asking for ahigh-end spa feel totheir new bathrooms,with features and mate-rials such as televisionscreens built into mir-rors, exotic wood fin-ishes, recycled glass tilesand sophisticated light-ing systems. Other pop-ular features includethose that enable ahome owner to stay intheir home as they age;including step-in tubsand shower stallbenches and rails.Both kitchen and

bathroom remodelingprojects were up 17 per-cent from two years ago.

Other popular jobs were window and door re-placements, room additions, handyman services andwhole house remodeling, although whole house re-modeling is down significantly from its peak in themid-2000s.The motivation behind many home owners’ deci-

sion to remodel has changed as well. The top two rea-sons for remodeling were the need to repair or

replace old or outdated components and the desirefor better and newer amenities. More than 50 per-cent of remodelers said that these two reasons for re-modeling have become more common over the pasttwo years.Whether they are inspired by the amazing

makeovers shown on television shows, or theirchanging lifestyle necessitates repurposing spaces to

make more efficient useof their home’s squarefootage, home ownersare turning to profes-sional remodelers tohelp improve theirhome.For more information

on remodelers in ourarea, go to www.wester-nohiohba.com or formore in depth informa-tion on remodeling andthe impact on yourhomes value visitwww.nahb.org/remodel-ing.Also be sure to mark

your calendar now forour Fall Home and GiftShow. Vendors will be onhand to discuss with youvarious ways to increaseyour home energy effi-ciency, look, value andoverall comfort just intime for the Holidays.Also get your holidayshopping started by visit-ing with the varioushome goods, crafts, gifts,beauty and specialty foodvendors at the show fromFriday, October 26through Sunday, October28, 2012 at the MiamiValley Centre Mall. Formore information on theshow or to become ahome interior designervendor, home improve-ment specialist vendor oran arts, crafts or gift ven-dor, call Donna at theHBA office at 937-339-7963.

TOM BEHM,President, Home Builders Association

Changing trends in remodeling reasons and rooms

Checklist for finding and hiring abuilder or remodeler

Use this checklist to help you select a homebuilder or home remodeler to work on or buildyour home:

Contact the Western Ohio Home BuildersAssociation for the names of member buildersand remodelers: www.westernohiohba.com.You should also ask family, friends or cowork-ers for recommendations.Make sure the builder or home remodeler

has a permanent business location and agood reputation with local banks and suppli-ers.Find out how long they have been in the

building business. It usually takes three to fiveyears to establish a financially sound busi-ness. You want to make sure they will bearound after the construction is complete toservice any warranties.Check out the company's rating and if there

have been any complaints filed with your localBetter Business Bureau: www.bbb.org.Make sure the builder/remodeler has suffi-

cient workers compensation and general lia-bility insurance. If not, you may be liable forany construction-related accidents on yourpremises.Ask the builder/remodeler to provide you

with names of previous customers. If theywon't, beware. If they do, ask the customers ifthey would hire the builder/remodeler again.Ask if you can see the builder/remodelers

work, both completed and in progress. Checkfor quality of workmanship and materials.Do you feel you can easily communicate

with the builder/remodeler? Remember youwill be in close contact with them throughoutthe construction process and afterward asyou live in your new home.Make sure the builder/remodeler provides

you with a complete and clearly written con-tract. The contract will benefit both of you. Ifyou are having a new home built, get and re-view a copy of the home warranty and home-owner manual as well.Be cautious of unusually low-priced bids. If

the builder/remodeler is unable to pay for thematerials and labor as the project proceeds,this may indicate a potential problem. Keep inmind that less expensive does not necessar-ily mean better!Find more helpful advice on choosing the

right builder for your next project, contact theWestern Ohio Home Builders Association at937-339-7963 or visit our new website atwww.westernohiohba.com.

Doing your homework will help you have amore successful experience

A charming and conveniently located neighborhood... Edgewater is approximately 2 miles west of Inter-state 75 on State Route 55 (Exit 73) in Troy, Ohio just minutes away from schools, shopping and restau-rants. A new section, with lots to accommodate 3-car garages, is coming soon.

Visit Harlow Builder’s Open House in Edgewater every Sunday from 2:00 to 4:00.

Welcome to Edgewater!Welcome to Edgewater!

HomesStartingin the$160’s

NowTaking

Reservations!

TROY’S NEWEST NEIGHBORHOOD!CUSTOM BUILT HOMES STARTING IN THE $300’S

of Stonebridge

For more informationcontact

Harlow BuildersOffice: 937-339-9944Cell: 937-603-0513

Email: [email protected] our new Officeand Selection Center

located at701 N. Market St.,Troy

DIRECTIONS: I-75 to exit #74 (OHST RT 41), head east on ST RT 41,enter the round-about and take the

third exit onto N. Market Street.Located past the Troy High School and

immediately past the railroad tracks.

937-339-9944www.harlowbuilders.com


home builders guide august 2012

Documents

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