Building a new home isn't for the faint of heart (especially when you are trying to build something rather unique, but don't let the fear of the unknown intimidate you!
This home all started with a simple thought and took off with lots of research! Don't let it all overwhelm you, just take it one step at a time. :) And have lots of patience!
This home all started with a simple thought and took off with lots of research! Don't let it all overwhelm you, just take it one step at a time. :) And have lots of patience!
Know your Budget
Most people do NOT know what their budget should be when buying or building a home.
If this is the case, it is good to first meet with a mortgage Loan Officer to see what amount of mortgage you qualify for so that you know what your budget looks like and what you will actually get approved for.
We knew we wanted to keep our mortgage payment low so that number was our starting place. Though we COULD qualify for more, it is usually not a good idea to get the MAX you will qualify for. The mortgage company will qualify you for an amount that is based on your debt and your GROSS income (the amount before taxes are taken out). That does not include things you pay for like groceries, daycare, utilities(in most cases), gas, cable, internet, etc. So, keep that in mind when deciding on your budget, because you certainly do not want to be house poor!
We knew we wanted to keep our mortgage payment low so that number was our starting place. Though we COULD qualify for more, it is usually not a good idea to get the MAX you will qualify for. The mortgage company will qualify you for an amount that is based on your debt and your GROSS income (the amount before taxes are taken out). That does not include things you pay for like groceries, daycare, utilities(in most cases), gas, cable, internet, etc. So, keep that in mind when deciding on your budget, because you certainly do not want to be house poor!
Once you have met with a bank (or made other financing arrangements) then you can move forward knowing where you stand with your building budget.
Find the Land
This may be the most difficult part of the process for you, or it could be the easiest step!
In our case, we already land and knew where we would build. That was the easy part!
Finding land can be difficult depending on where you live, however I know most people who consider building already have land or know where they want to build. If you don’t, you are going to want to consider looking outside of heavily populated areas to get a reasonable price. This could mean extending your commute to work, so lots of things to consider! You can absolutely get with a realtor to help you search for land in your area.
The land is important if you plan to finance your home because if it is paid for, it can serve as your down payment at closing. Just like if you were to buy an existing home, you must bring a certain amount of money to closing (which all depends on the type of home loan you are using). This is a percentage of the total home+land value. If you have already purchased your land and own it outright then you have what you need to get started and probably have most (if not all) of the down-payment you need.
*I will write a separate post on the construction loan process since it is a whole long thing in itself. 😃
Decide on specifications: material, size, number of rooms, etc.
If you have gotten to this step then I bet you already know what you want to build, or at least have a very good idea. Barndominiums are all about building a home the most cost efficient way. Because it is completely custom, you may choose to upgrade certain items that are not necessarily the most cost efficient choice, but are worth the extra expense for you. For instance, we chose to do granite counter tops in our kitchen rather than something a bit cheaper, like laminate. That was something we preferred to upgrade.
This is the step where you should make a list of items you know you want. (flooring type, rooms, types of cabinets, etc.). We had a list of MUST haves and a list of MAYBES. Once we asked the builder about the pricing for our MAYBE list then we decided if it was necessary. Being SUPER organized here will help you out a lot in the long run. You cannot get an accurate quote for building your home if you do not know all the specifics. So, do your research and try to be as specific as possible on your list.
This list is what you will use to meet with your builder. You will meet with potential builders and say, "I am looking to build a home that looks something like this (show a picture) with siding and a composite roof, 3 car garage, 4 bedrooms, 4 bathrooms, and concrete floors." They need a GOOD idea of how the finish-out will be if they are going to give you a GOOD price estimate. Price per square foot should vary a GREAT deal between a barndominium and other custom-builds that include lots of nice finishes. Make sure you are getting an accurate price! We had to meet with MANY builders in order to get someone to give us an accurate price based on our selections.
Obtain House plans
There are SO many ways to get house plans now with the internet. You can go the traditional route and use an architect if you know a good one. However, this is the most expensive route which isn't the best when building a barndominium. Architects also usually charge by square footage which was what was an issue for us since we were building a LARGE box. HAHA!
You can find a LOT of plans online and purchase them that way and it is much cheaper. We actually ended up drawing out our plans ourselves and our builder was able to create a formal plan from that. He was also able to help us change up things that we weren't sure on since he had that experience. This cost us nothing extra for him to help us with that. So, it is worth asking your builder if they could do that for you! Keep in mind that you DO have to have actual house plans for the bank if you are getting a construction loan.
Find a builder
Do yourself a favor and meet with a LOT of builders. Look on local groups in Facebook and find builders who normally build more cost-efficient homes NOT mansions. The large builders will not give you the time of day and they will give you a ridiculous price to build your home.
We met with several who were just not interested in building what WE wanted. We then found a local builder who mostly worked on remodels, but built a few custom homes per year. When we met with him we KNEW that was our best option. He gave us an EXACT cost after he sat down with us and calculated EVERYTHING. His bid would NOT change unless we made changes. Since we were on a tight budget, we were so happy to hear this. He stuck to that price and we only increased it a bit during the build with some decisions we made. Make SURE your builder gives you a set price, we have heard way too many horror stories about builds increasing tens of THOUSANDS above the initial bid.
Find a bank that offers construction loans
You will need to search local banks to find a lender to do a construction loan on a barndominium. Construction loans are much different than your traditional mortgage and not all banks offer them. Depending on the material of the exterior of your home (metal vs. siding) the loan rules will differ so make sure to tell them if your home will be metal. Construction loans are different from traditional mortgage loans in many ways so you need a bank that does them often so that they know what they are doing. Time is money when you have a construction loan. Each month you will pay an interest payment until the loan is converted to permanent financing so you want to make sure the bank isn't holding up the process.
Obtain a land survey if needed
If you do not own a current survey of the land, you will need to get one done for the bank. This will be one of the things they need to get started on the loan.
Complete construction loan (items needed for completion: plans, appraisal, etc)
Once you have gathered all the loan documents along with the survey and house plans, the bank will do an appraisal of the land and the plans of the home you will be building. When the appraisal has been completed and the loan has been approved, you will close on the construction loan and then you can begin construction!!
Break ground on your new house!
You will turn paperwork into the bank each time you need money for each step of construction. The first bank draw is usually very large to get started. This will cover the pad and foundation. During the process the bank will make sure you are on budget and they will do random drive-by inspections to see if the builder has done what you have taken money for.
Building process
You will let the bank know when the builder is close to completion and they will do a final inspection and get you ready to convert the new loan to a permanent loan. Once the home is complete you will do all the paperwork for the new loan and close on the permanent loan (once again) at a title company. (NOTE: Some banks DO have the option for you to do a ONE TIME CLOSE where you do not have to close twice. Make sure to ask them about that option).
DONE!
It took our builder about 5 months to build our home, which was right on schedule! It took an additional 5 months to complete the land clearing, survey, construction loan, etc. So the paperwork took about the same amount of time as the house! It was a frustrating beginning, but once the builder got the green light it was actually a very quick process. Make sure to ask each builder what their timeline to build is and what happens if they go way over that. I have heard of builders taking double the amount of time, which is craziness!
Hope all this helps!
Happy Building!
DONE!
It took our builder about 5 months to build our home, which was right on schedule! It took an additional 5 months to complete the land clearing, survey, construction loan, etc. So the paperwork took about the same amount of time as the house! It was a frustrating beginning, but once the builder got the green light it was actually a very quick process. Make sure to ask each builder what their timeline to build is and what happens if they go way over that. I have heard of builders taking double the amount of time, which is craziness!
Hope all this helps!
Happy Building!
