| Building a Log Home? Don't make these | | | | |
| mistakes….. | | | | |
| | | | |
| Research suggests that building a home can be | | | | |
| one of life's most stressful events. Your | | | | |
| dream of building that perfect log home, on | | | | decisions to be made. Many |
| that perfect lot can easily turn into a | | | | times, those decisions need to be made |
| nightmare. I worked in the real estate | | | | quickly. If the electricians are there and |
| industry for over 15 years. I've seen a lot | | | | have a question, remember that they are |
| of heartbroken homeowners who realized to | | | | waiting on you to make a decision and likely |
| late that their dream was crashing. Most | | | | there are other contractors working on the |
| often the disaster could have been prevented | | | | house waiting for them to finish. Holding up |
| if only they had done their research before | | | | one decision can hold up the entire process, |
| signing any papers. Here are a few mistakes | | | | sometimes for a good length of time. Think |
| that I've seen over the years that just might | | | | of the building process as a well |
| save you some money and a lot of time. Maybe | | | | orchestrated play. Everyone has their part |
| even prevent a headache or two: | | | | to do and many times they can't do it until |
| | | | someone else has done their part. Don't get |
| 1. Only work with reputable companies: From | | | | me wrong, sometimes there are catastrophic |
| your lender to your builder, researching the | | | | circumstances and stopping the building |
| companies that you are bringing on board for | | | | process is necessary, but many times it's |
| your project can save you money and | | | | not. Making good, quick decisions can be the |
| headaches. | | | | difference between your suppliers getting |
| | | | their money on time or not, and that in |
| The Lender: | | | | itself can be catastrophic. |
| | | | |
| Don't just assume that the bank you've always | | | | 3. Take frequent road trips: |
| done business with is the one you want to | | | | |
| borrow from to build your new home. Do check | | | | It's your home, and ultimately your money. |
| out their loan products but don't forget to | | | | Take the time to go to your building site and |
| apply at 2 or 3 other institutions. Fees can | | | | make frequent inspections. It can save you a |
| vary as much as several thousand dollars | | | | lot of heartache in the long run. Check the |
| between lenders and there are literally | | | | workmanship, make sure it's what you |
| hundreds of loan products out there that | | | | expected. Check the design, is it what you |
| might meet your needs. Always check the fees | | | | agreed on? Check the details, are they what |
| on the Good Faith Estimate that you receive | | | | you asked for? Did they put in a tub and |
| at the time of application. An easy way to | | | | shower instead of an octagon shaped garden |
| compare lenders is to check the APY (Annual | | | | tub? Maybe you changed your mind on the tub |
| Percentage Yield). Every bank is required to | | | | early in the process and told your realtor or |
| give that percentage to you. Basically, it's | | | | builder. Maybe you even signed a "change |
| the real cost of your loan. The higher the | | | | order" form. There, you thought it was all |
| APY, the higher the cost of borrowing from | | | | taken care of, right? Not |
| that institution. The APY rate.is not the | | | | necessarily….It's so easy for |
| same as your note rate. Your note rate is | | | | miscommunication to happen when there are |
| what your payments are based on, the APY is | | | | many people involved in a project, and |
| the cost to you of borrowing. If you are | | | | building a home is no exception. Take it upon |
| thinking of being your own general contractor | | | | yourself to double check the realtor/builder. |
| for the project, the smaller, hometown banks | | | | If they made a mistake it's a lot easier to |
| are usually easier to work with. You are | | | | fix things early in the process than to wait |
| going to be in contact with them regularly | | | | and then play the blame game. Don't wait, |
| throughout the process so make sure you can | | | | and don't assume anyone cares about your new |
| get in touch with them easily ie: you will | | | | home more than you do. Remember, it's their |
| need to submit invoices to receive draws on | | | | job, not their home. |
| your construction loan. Many banks have | | | | |
| their own process for receiving your draw | | | | 4. Don't sign that stack of papers unless: |
| money so make sure you thoroughly understand | | | | |
| their process and make sure you can work with | | | | Don't sign unless you understand what you are |
| it. Working with a lender across the country | | | | signing, the house is completed the way you |
| might not be the best thing for your money | | | | agreed on and there are no outstanding bills |
| and your sanity if you're the general | | | | for work done on your new home. At the |
| contractor. | | | | closing, there will be a mound of paperwork |
| | | | for you to sign. You have the right to read |
| Above all, read before you agree. | | | | every document, either at closing or before. |
| | | | Ask the title company to get you a copy of |
| The Builder: | | | | all of your closing documents 24 hours before |
| | | | closing and then take the time to read them. |
| Work with a reputable builder that you can | | | | Ask questions before you get to the table. |
| readily get in contact with. Here are a few | | | | Sometimes it's not a quick thing to fix an |
| good questions to ask before you agree: Do | | | | error so the more you know before closing, |
| they have an after hour emergency number? Do | | | | the easier it will be. This is your loan |
| they carry builder's risk insurance? Do | | | | that you will be paying on for a long time, |
| their subcontractors clean up the trash | | | | make sure you understand your |
| daily? Do they have a good reputation? Does | | | | responsibilities. I'm a big advocate for |
| the price seem too good to be true? If it | | | | not signing before the house is done. A new |
| does, it probably is. Builders now days can | | | | home will always have a "call back" list. |
| build huge homes for less money. They | | | | Little things here or there that need touched |
| advertise "more square feet for your money". | | | | up. However, if there is something major |
| Sounds great, right? Not necessarily. Can | | | | that's not done, or something major that's |
| you put a waterbed on the second floor? | | | | not done to your satisfaction, you should |
| | | | think about calling a lawyer. Once you sign |
| This is a true story. A friend of mine built | | | | those papers it can become a battle trying to |
| one of those "more square feet for your | | | | get something corrected by the builder. |
| money" homes. Sure, it was big and it looked | | | | Remember, they have their money and other |
| nice but…the studs were 24" on center | | | | homes to build. Until you sign and they have |
| and not the standard 16", no waterbeds | | | | their money, it will be easier to get their |
| allowed, the walls were not finished | | | | attention. 5. When problems arise: |
| smoothly, and EVERYTHING was an upgrade. She | | | | |
| ended up paying more for a "huge" home than | | | | If you don't already have a lawyer, get one |
| she should have because the builder "forced" | | | | (some states require it). Sure, your |
| her to work with their lender who, after | | | | realtor, builder and lender all want to make |
| qualifying her knew exactly how much they | | | | sure the process goes smoothly and will do |
| could charge her and ultimately that's what | | | | what they can to make sure that happens. |
| she ended up paying. They're staff was very | | | | After all, they are all getting paid once you |
| well trained. | | | | sign those papers. However, if things are |
| | | | not going well, the best way to make sure |
| Make sure you know who you are dealing with | | | | your interests are being looked after is to |
| before you sign and make sure you know | | | | get a lawyer. Find a lawyer that specializes |
| exactly what you are getting for your money. | | | | in real estate transactions. They will get |
| | | | things worked out in a way that protects your |
| 2. Make solid decisions in a timely manner: | | | | interest. It may cost you a few hundred |
| | | | dollars but it will be well worth it. |
| As you can imagine, building a home from the | | | | Sometimes you can't put a price on peace of |
| ground up will require hundreds of | | | | mind. |
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