If you are renovating you can get a home improvement loan but if you are building from dirt up you will need a construction loan. Not all banks offer construction loans so your choices are much more limited with this type of loan. It is usually for a fixed period of time such as one year and then you must refinance to a regular mortgage. We found a couple of banks in the area who deal in constructions loans. We talked to Franklin Synergy Bank but eventually obtained our construction loan from Pinnacle Bank. Many banks do not deal in construction loans but once construction is complete they can provide the permanent mortgage that follows the construction loan.
You will need to determine the cost of building the house and submit the budget and a copy of the house plans to the bank for the construction loan. You may choose to hire a builder and agree to pay a specific cost for him to build the house. The builder will provide the bank with a guarantee that the house will be completed for the contracted cost. He can do this because he will pad the cost. We wanted to be as cost effective as possible and found a builder to work for a 12% fee. This was a good rate as we have seen rates listed on the Internet for up to 18%. Rates vary in different parts of the country. We also shopped all the building labor and materials for the construction and found good best prices on each piece of the construction. This meant we were involved with the work everyday of the construction. We started with one builder and ran into some irreconcilable differences and changed builders in the middle of the construction. We were very satisfied with the second builder, Hart Home Builders, and would recommend them to anyone in the Nashville, Franklin, or Brentwood area.
There are a variety of residential construction templates that can be found online. The template is essentially a list of labor and material costs or quoted costs from subcontractors. The tricky part is that there are many items with a “rough-in” part of the work and a “final” part of the work that are billed in two pieces. This is because of the inspections that require the work to be inspected before it can be completed such as checking wiring in the walls before they can be closed. If you have a quoted price for the entire piece of work you need to know the exact percentages for both the “rough-in” and “final” payments so that you will know if you are on budget or not.
Take an item (ex: exterior painting) & breakdown the all components to get the best estimate from each sub.
If you get one number with no explanation you won’t know what that estimate covers or does not cover.
- Staining all exterior doors
- Exterior ceilings
- Exterior railing
- Soffitt boards
- Caulking windows, doors