2. Planning

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1. Location

Once you’ve found the ideal site for your future home, the next step is planning the construction.

Choose a reputable builder.

There are many options for home construction and many different builders. Some builders offer turnkey contracts, while others offer contracts that are more open to interpretation. Contracts that don’t address all aspects of construction can create additional costs and headaches during construction, especially if some items weren’t considered upfront.

Ask the following questions:

• How many years have you been in business?

• Are you a licensed contractor?

• May I see a copy of your insurance certificate?

• How long do you expect the construction process to take?

• How many different jobs do you typically work on at the same time?

• Who will be responsible for securing the required permits?

• Who will be in charge of clean up at the end of each day?

• How do you typically structure your draw schedule? •

How do you handle any construction contract changes?

• What is included in the base cost of my construction contract? What is considered an upgrade?

• Can you share references with me? Can I tour a few of your completed homes?

Think about cost overruns.

Unfortunately, when it comes to constructing a home, things don’t always go as planned. What happens if the excavator hits more rock than expected? What if you change your mind about the kitchen layout or decide you want to upgrade your countertops after construction has already started? Those possibilities and more speak to the importance of setting some money aside for unanticipated issues.

A lender looking out for your best interest may possibly increase your loan amount as a cushion to cover unpredicted costs or verify that you have additional funds available if needed. A good overrun rule of thumb is adding 7-10% of the anticipated cost of construction. Planning for overruns helps the construction process continue even when the unexpected happens.