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Articles -> Building Trends -> Construction Process
The Construction Process
Building your dream
| You’ve
planned, pondered and procrastinated long enough. It’s time to break
ground and build your dream home. All the homework and hard decisions
are about to pay off. But what’s your next step—and the one after that? This special section will take you through the construction process, from breaking ground to moving in. You’ll learn how to navigate the sometimes rocky road that is home construction—how to avoid pitfalls, save money, make smart decisions . . . and maybe even enjoy yourself along the way. |
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Be your own contractor
The challenges and rewards of doing it yourself
| You’ve decided to build a home. Sure, you’ve never done it before—but when have you ever let that stop you? Stop right there. While acting as the contractor for your home can be rewarding—psychologically and possibly financially—the decision to do so is not one to be taken lightly. You would be wise to consider first whether you have the time to spare, the expertise necessary and the extra money the job may unexpectedly require. Time to spare? Contracting a home—your first or your fifty-first—is a time-consuming process. “Being your own contractor is a full-time job,” says Brad Johnson, president of the Minnesota Society of the American Institute of Building Design (AIBD). “If you don’t have the time for it, don’t do it.” Your job as general contractor will be to gather several bids from and draw up proposals for subcontractors for each part of the building process, coordinate detailed work schedules and work with a lender to acquire financing. Tom Montgomery, president of Plan-It Consulting, a Minneapolis-based company that specializes in building company consulting, says, “There are roughly 30 to 40 different home-building categories that require subcontractors. The contractor will have to get three or four bids from subcontractors for each separate category. It takes a lot of time.” After the bids are collected and decisions are made on tradespeople, contracts are signed and the contractor—that’s you—must choreograph the intricate ballet of material deliveries and work schedules. Subcontractor A does his job; then it’s time for Subcontractor B to come in; these jobs are inspected while Subcontractors C and D wait in the wings. Barring any unforeseen delays like weather or poor craftsmanship—in which case schedules must be adjusted and subcontractors summoned back to the building site (this involves several phone calls generated by you, the general contractor)—Subcontractors E through Z will (cross your fingers) be on time, complete their contributions to your home-in-progress and exit on the correct note. As the project nears completion, you will be required to spend more time at the site, as much as an hour or two each day while the building crews are there, in the last one or two months of construction. Punch lists, quality checks and safety inspections are in your future. You know your schedule and your limitations. If your regular job and your commitments at home are flexible, taking on these extra responsibilities may be feasible. If not, the decision to act as general contractor of your home should be made accordingly. Know your know-how If you’re heading into unknown territory, here’s the good news: Intrepid souls like you have weathered the same storms, and have published books and articles to assist those who choose to follow in their footsteps. Seek out these gurus and study their road maps. A working knowledge of residential construction does matter when you’re a self-contractor. Many begin this project knowing that since they are personally invested in the house, the quality of the finished product will be higher than if a disinterested third party were acting as contractor. This may be true. But that means you must assess the quality of the work that’s done on the structure. Be honest with yourself: Do you know what to look for? If a job is done poorly, you must schedule the appropriate tradesperson to return and fix the problem, often resulting in other deadline setbacks. After a frank examination of your expertise, you decide to go for it. You’re convinced you know the signs of good craftsmanship. Plus, your family is behind you. Now all that’s left is to convince everybody else. Liability for safety and conditions on the site will generally fall upon your shoulders, although subcontractors will often be covered under their employers’ insurance. Talk to your insurance agent about whether your homeowners policy will be sufficient coverage or whether you should temporarily assume a more comprehensive policy. The other professionals to contact are at the bank. Because self-contracting is often done by people who are not licensed, experienced professionals, don’t be surprised if getting financed is a bit more of a hassle. Don’t give up too easily, though. Lenders do exist that will take on the extra risk—you may just have to swallow a few more conditions, such as an overall project deadline or a slightly higher interest rate. Which leads to the next consideration regarding this decision . . . Money Saving money is one of the attractive features of self-contracting, since a general contractor’s fees can total 20 percent of the building costs. Doing it yourself means getting more house for your buck. Just remember to figure in the time you’ll spend and the costs you may be forced to absorb as a result of poor workmanship, bad weather conditions and a multitude of other occurrences that professional contractors and their deeper pockets are more prepared to handle. “If you’re doing it just to save money, chances are you won’t. The industry will beat you up,” says Montgomery. The experts advise against making the builder decision solely based on money. If you’re bent on doing it yourself, acknowledge your limitations and consider hiring a construction consultant. This person is typically an experienced contractor or building professional who can guide you through the home-building process. This person knows the industry inside out and can recognize an unreasonable bid. He or she has developed complicated work schedules before and can make suggestions for yours. His or her keen eye will catch craftsmanship flaws you might miss. Perhaps best of all, engaging a construction consultant costs much less than hiring a general contractor. Plus, you’ll still have the satisfaction of being intimately involved in the building process. You know yourself best. Before taking the home-building bull by the horns, take an honest look at your time, expertise and resources. The building process will be a memorable part of the finished product, and you want to be fully satisfied with your results. |
Preliminary steps
Preparing to break ground without breaking the bank
| Once
you’ve gotten through the initial stages of the building process, you
may think your part is over. It isn’t. You’ll need to gather
information, talk with your builder and make weighty decisions that
affect all aspects of your new home. Proper planning is one of the best
ways to ensure your new home’s quality and value. Before you break
ground, follow these tips to prepare you for this risky but
all-important first step: 1. Above all, establish good communication with your builder. Make sure that this person is someone you trust and can address frankly. The home you are purchasing will be crafted before your eyes, so there is a great deal of pressure on the builder—and high expectations from you—for the final product. It is essential that you meet in the middle. As an initial topic, discuss your roles and responsibilities throughout the process. Talk with your builder about who will take care of permits, insurance, temporary utilities (power, water, etc.), contingency plans, inspections and other regulations or local requirements, plus any fees associated with them. Set up a payment schedule on which you both agree. Make sure you put in writing who will be responsible for what and by when, so that you avoid ugly legal disputes in the end. If necessary, consult your attorney about particulars you may have forgotten. Next, determine a specific time frame in which construction will be complete. Though your builder will want to provide you with the most accurate estimate possible, factors like weather conditions, labor shortages and permit delays may hinder the process more than either of you would hope. The longer it takes to pull together pieces from the initial stages—details which should be finalized 6 to 12 months before breaking ground—the longer it will take to complete the project. Establish a general time frame with your builder and continue to inquire about the target completion date, but don’t be surprised if delays creep up because of unforeseen circumstances. On the other hand, be aware of preventable delays and be ready 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 up the lot, you will need to obtain a soil report, which summarizes the lot conditions and assesses the surrounding environment, while suggesting the proper foundation for your home. Conducting a soil test takes about a day, and may be performed by your builder or an engineer you hire; generating 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 the lot to determine the best placement of the home. This will determine the parameters of your home’s footprint, as well as its prime location with respect to sunlight, ground conditions and landscape features. This should only take about a day to complete. Make any necessary changes to your plans now, including drawing a new foundation, reversing the layout, converting the exterior wall framing or adjusting the window placement. These tests and modifications are important for the next step: securing a building permit. 4. With some exceptions, breaking ground requires that you obtain a building permit from your local building department. In most cases, your builder will take care of this step for you and include any fees in your final building costs; however, the application process requires many documents from you, so your direct involvement may be helpful (see sidebar below). Typically, but depending on the amount of construction taking place in your area, you will receive a permit within a few days of applying, but plan for two weeks, to be safe. Any changes that the building department officials specify for your plans are mandatory and non-negotiable, and should be made immediately. Major changes may require additional approval before they can be implemented. If you belong to a homeowners association, you may require additional approvals for your proposed blueprints, building materials and/or lot choices. Make sure you are aware of these requirements, and comply accordingly. Obtaining final approval means that for all practical purposes, you may proceed with your building plans. Routine inspections arranged by your builder will ensure that the construction of your home continues to meet local codes throughout the process. (Your builder should keep an inspection card listing a record of inspections and subsequent approvals, in order to exchange this card for a certificate of occupancy once the home is complete.) 5. Now begins the process of preparing your site. First, it may be necessary to level the lot before laying the foundation. You may have to remove trees, rocks and debris that otherwise hinder your ability to build in that area, so discuss with your builder how you want these items to be discarded. Think carefully about the removal of trees—while some may interfere with power lines or with the growth of other plants, others will add beauty and value to your property and are worth keeping, if feasible. 6. Next, your builder will stake the house using batter boards and taut lines to form its general outline, a process that generally takes a day or two, depending on the size of your home. He or she may choose to do a “rough stake” that is less precise and allows for more accurate adjustments after excavation has begun; if so, this process may add another day to the overall time frame, but it could be worth the extra effort. Be careful not to disturb these lines when you visit the site! 7. At last, you have reached the point of groundbreaking! Excavation of your site will now begin within the parameters established by the stakes. The topsoil that is removed will be deposited elsewhere on your lot and eventually used to shape the grade of the finished site. Utility lines that connect your home to water, sewer and power resources will also be installed at this point. Just because your home’s construction is beginning doesn’t mean you can just sit back and watch it happen. Your participation throughout the building process, whether through “sweat equity” or by regularly scheduled, on-site meetings with your builder, can help guarantee your home’s quality and save you money. While contracting your own home can save you thousands of dollars, it is generally just as efficient—and if you have less experience, more practical—to hire someone else to do it. You may, however, apply the finishing touches, such as paint, wallpaper and landscaping, to put your personal mark on the process and cut costs. Carefully choosing products that suit your needs without breaking your bank account can save you money in the long run. There are always low-cost alternatives for the products you love but don’t feel you can afford. Manufactured stone, for example, easily replaces heavy, expensive and hard-to-find natural stone, with essentially the same look (see sidebar below). By researching your options before and during the building process, and staying well informed of the home’s progress, you can avoid making costly mistakes while protecting your investment. |
What you need to apply for a permit
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| Product checklist Decisions to make along the way From the ground up
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Sequence of events
What will happen—from beginning to end
| Your
lot has been cleared and it’s time to begin one of the most challenging
and exciting experiences of your lifetime: the construction of your new
house. This is where it gets fun. You will make it through this event
if you have a good understanding of what will happen—and in what order
it will happen. Let’s start at the beginning of the journey. Foundation If you chose any kind of basement foundation, you’ll likely see an excavating crew arrive on site first. Don’t panic if the hole they dig is larger than the foundation; they need to allow room for workers around the concrete forms. Poured concrete is the most common foundation-wall type, although treated wood, brick or concrete blocks are used, too, depending on your location and soil type. Assuming your foundation is poured concrete, you’ll see the forms go up and reinforcing bars go into the forms. Openings will be marked for windows and utilities. After the concrete is poured into the forms, anchor bolts are placed into the still-soft mixture; these bolts will secure the exterior walls to the foundation. After the concrete hardens sufficiently and the forms are removed, you might see waterproofing measures being taken, such as an impermeable membrane or asphalt coating being applied to the foundation wall to prevent water from seeping in. Once the waterproofing efforts are complete, the surrounding soil is backfilled against the exterior of the foundation wall. If you chose a slab foundation, that’s exactly what you’ll get: a slab of concrete, usually four to six inches thick, poured right over the ground with little or no soil preparation required. This foundation is cheap, which makes it the foundation of choice in areas like the Sun Belt, where frost heaving isn’t an issue. In Texas, slab foundations are common because a thick layer of bedrock often lurks just below the soil’s surface; below the bedrock, the water table awaits. Pole (wood posts) and pier (cement posts) foundations are less common, but a necessity in some areas, such as coastal states, where homes are sometimes built either partially over water or in floodplains. In Florida, for example, the seaside houses look like they’re standing on stilts, with cars often parked underneath. Framing Floor first, walls second. If you have a basement foundation, a subfloor will be installed first, using joists (usually a series of engineered I-joists or dimension lumber, such as 2x10s or 2x12s) with 4x8 flooring material nailed or screwed to the joists. If you have a slab foundation, the exterior walls will be mounted directly on the slab. The framing stage is the skeletal stage, where exterior walls in all their bare splendor rise up and provide glimpses of the future shape of the house. Holes for windows and doors appear in the building’s “envelope.” The interior begins to show its form, too, as interior walls and closets are framed in. Framing follows a logical progression. After the first floor walls are up, roof trusses are placed on top of the walls, then linked to the exterior walls by metal straps and tied in to each other by 2x4s. Of course, a two-story house would have the second set of walls and flooring in place before the roof went on. Roof sheathing—usually 4x8 sheets of plywood or oriented strand board (OSB) is nailed to the roof trusses, providing a deck on which the roofing material can be fastened. Roofing In the colder regions of the country, such as Minnesota, the first thing to go down on the roof deck is an adhesive, impermeable membrane (nicknamed “ice and water”), which is placed along all the eaves. The membrane costs more than asphalt paper or “roofers felt,” but it prevents ice-dam-trapped water from backing up under the shingles during the winter. Asphalt paper is then applied to the rest of the deck. Once this base layer of membrane and paper is down, the shingles can go on. Asphalt shingles are most common; these usually are designed to last 25 or 30 years, although longer-lasting (thicker) shingles are available. Roof-covering choices go far beyond the ubiquitous asphalt type. Clay tiles, slate, cedar shakes, sheet metal—the choices are broad and wide-ranging in price. Exterior trim Exterior trim—the home’s “skin”—often is installed while the roofers are carrying out their duties. The bare exterior framing studs are covered over with sheathing (the same material as that used on the roof), then a vapor barrier is stapled to the sheathing to help prevent moisture and air from seeping in and rotting the studs. Windows and doors are installed, as are fascia boards (nailed to the ends of rafters) and soffit boards (nailed underneath the eaves, parallel to the ground). The exterior cladding goes on next. This could be cedar siding, stucco, brick, stone, vinyl or cement fiber siding, which is a hit in the South, since termites have little taste for cement! Gutters could be installed next, although it’s usually a good idea to wait until the roof is completely finished before having the gutters put in place. No sense dropping thousands of dollars on new gutters, only to have heavy ladders bend them—or worse. Mechanical systems Your heating, ventilation and air conditioning systems (HVAC) will be installed in two stages. The first stage is the “rough-in” stage, when workers install the components that you will not see once your home is finished. Think of these elements as the “veins” in the body of your house—water pipes, ducts, wiring. The subcontractors will return later, sometime after the drywall is up, to install the “pretty” stuff: light and water fixtures, heat registers, etc. Insulation Now it’s time to pad your pad. The exterior wall cavities between the studs are filled with whatever type of insulation you specify. Common choices include fiberglass batts and blown cellulose, but a growing number of home builders are using foam insulation, such as Icynene®, which is applied as a thick liquid that expands and hardens, filling every crevice for an airtight seal. Environmentally friendly insulation choices exist today, including UltraTouch, a batt-type insulation made from reclaimed cotton that the manufacturer asserts will insulate better than fiberglass and is easier on the installer’s skin. Drywall You might be more familiar with a brand name for this material: Sheetrock®. But by any name, drywall will be “hung” (nailed to your interior walls and ceilings) next. In most regions, 4x12 sheets that are 5/8” thick are nailed or screwed to the ceiling first, and then half-inch boards go on the walls. In areas prone to moisture, such as bathrooms, water-resistant drywall (sometimes called “green board” for the green paper that covers one side of it) is installed around the tub or shower. A more expensive alternative to water-resistant drywall (but a wise investment) is cement board, which is impervious to water, rather than simply resistant. After the drywall is hung, a thin, fibrous tape is spread over the seams between the sheets and a joint compound (drywallers call it “mud”—a reference to its consistency) is spread over the tape. Up to three coats of the compound are applied, allowed to dry and sanded smooth before the walls are ready for the final step. At this point, if you don’t intend to paint or wallpaper the walls, you can have a texture applied as a nice finishing touch that also creates some visual interest. Application of wall and ceiling texture sometimes involves the use of a timed machine that—after the windows and door(s) are covered with plastic—switches on and wildly sprays texture about the room in a random pattern. Wait a few minutes and voila—instant texture. Just make sure you’re not in the room when the machine kicks on! Interior trim First come your interior doors, which are often pre-hung in a jamb that fits neatly into the framed opening. Lengths of trim wood are applied to the outside edges of the door openings. Base molding pieces are applied to the walls where they meet the floor; crown moldings cover the walls where they meet the ceiling. Other trim needs, such as stair rails and fireplace mantels, also are installed at this time. Paint and stain Sometimes the trim pieces are installed unfinished; you can paint or stain them at this point. Any untextured walls can be painted or wallpapered now, too. If you feel up to the task, this is a great job that you can take on your own shoulders. But if you do, don’t skimp on the preparation requirements. Sand down high spots or globs of joint compound that the drywallers missed. Fill in low spots or outright holes in the drywall, and run a bead of caulk around all of the window and door trim, binding it to the drywall. Cover the edges of your trim with easy-to-remove masking tape, and then put one coat of primer on the walls. Let it dry, then put on two coats of paint for a lasting hue. Wait a day or two, and then remove the masking tape carefully. And don’t forget to go over the walls—especially around the trim—with a small brush, touching up any spots you missed. Finish work This stage will definitely get you excited. In come your kitchen and bath cabinets, and that granite countertop you’ve always wanted. The ceramic tile will be installed in your entry and master bath. The carpet will go down. Your kitchen will fill with appliances, as will your laundry room. All the aesthetic touches that make a house a home will appear: mirrors, medicine cabinets, screen doors, light and water fixtures, heat registers . . . your house is beginning to show its character because it is almost finished! Cleanup After the exterior painting and/or staining is completed, your driveway and/or sidewalk is installed and the cleanup begins. Again, this is a task that you can handle, if you want to take it on and save a few bucks. Call your garbage company and have them drop off one of those oversized trash receptacles. Tour your property and throw away any remaining debris that you find. A grader will arrive to complete the desired shape of the land around your house, molding it so that water will flow away from your home’s foundation. You can hire a landscape contractor to install sod (or grass seed), plant shrubs or flowers, create a hardscape or a pond—whatever your heart desires. A smart landscaping plan will add beauty to your lot, which will help your future resale efforts. The construction process usually takes months to complete, but the end result is usually an almost overwhelming sense of accomplishment and sheer joy. You did it. You built your new house. | |||||||||||
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| Earth-smart building materials Today’s earth-friendly building materials and products last longer, contribute little to landfills and keep your conscience clean. Here’s a sampling of what’s out there. Cover your floors with tough-as-nails, sustainably harvested bamboo flooring. And if you’re looking for something to put on those floors, how about . . . more bamboo? Visit www.bamboohardwoods.com for more information. If your floor just has to be wood, try reclaimed and salvaged planks. Beams are also available. Visit www.duluthtimber.com for more information. Your kitchen and bathroom tile needs can be accommodated with recycled glass tiles. Wine bottles, old windows and more are melted down to create stunning pieces of pragmatic art! Visit www.bedrockindustries.com for more information. Composite woods are great for decks and railings. Manufacturers mix wood and polymer resins (some use recycled plastic grocery bags) to create a product that looks and even feels like wood, but doesn’t warp, split, crack or discolor. This is cool stuff. Visit www.fibercomposites.com for more information. Insulate, deaden noise and beat back moisture with multipurpose panels made of recycled newspaper. The 4x8 panels can be fastened to the walls or ceilings, or laid down on bare concrete as a subfloor, with your choice of flooring material on top. Visit www.homasote.com for more information. What do you do with obsolete aircraft? Why, melt ’em down and make fixtures and furniture out of them. Chairs, tables, soap trays and toothbrush holders . . . you name it. Visit www.azcast.com for more information. | |||||||||||
| Inspection during construction Don’t wait till move-in day to discover everything isn’t how you intended. Along the way, keep your eyes peeled for problems that will cost you plenty if you wait to fix them. After the framing is finished and the roof is on, walk through the home with your builder and appraise these key items:
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| Save money along the way Here’s a collection of our favorite tips for keeping your pockets “green” and making wise financial choices during the construction of your home.
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Orientation
This is not your father’s walk-through
| At
last! Your new house is complete. The walls are up, the carpet is laid,
the appliances are installed—all it requires is your furniture and
other personal touches to make it your home. Then you notice a crack in the master bedroom wall. The ceiling above the living room—which is directly beneath the master bath—is bubbled and wet from an apparent leak. Litter and debris cover the foyer floor. And a whole string of lights remains dark when you flip the switch. Is this what you call complete? To make sure all of your expectations are met, and that you don’t meet problems you didn’t expect, you’ll need to know a few things about the close of the building process. First, understand that your builder may be operating under a certain standard of “tolerance”; because not all construction is perfect, there are certain guidelines as to which imperfections are livable, and which are unacceptable. For example, according to general industry procedure, it is passable for an eight-foot wall to be up to 1.5 inches off plumb, or for a crack in the foundation to be 1/4 inch wide. Considering this, you’ll want to be sure you’ve communicated your expectations and reached a compromise with your builder early in the process, to avoid anxiety, confusion and bitter disputes at the end. Next, schedule a “walk-through” with your builder to review all aspects of the home and take note of what still needs to be finished, repaired or touched up. Part inspection and part demonstration, the walk-through should teach you more about caring for your new home. If you don’t know anything about your new geothermal heating/cooling system, for example, the walk-through should allow you to test it out with the builder present, in order to allay fears and answer questions now, rather than weeks or months later. Allow a minimum of two hours to tour your new home; ideally, you should use daylight hours to get the full effect. Dress comfortably and casually—no sense risking damage to good clothing! While conducting the walk-through, take your time and pay attention to every detail. In particular, look for anything that might affect your home’s livability. For example, examine the foundation to be sure that three to six inches of it is exposed to keep water from seeping into your home during a heavy rain. Also, if you have central air conditioning, be sure that the large line coming out of the home is completely insulated, and if not, that this and any such hole is caulked properly to prevent leakages (see sidebar below). Don’t be afraid to test appliances and other automated home functions, such as faucets, light switches, electrical outlets, toilets and the security system, if applicable. Run the dishwasher, washing machine, dryer, furnace and air-conditioning through a full cycle—no matter what season it is—to make sure that everything is working properly. Make sure you have hot water and cold water when and where you want it. (In other words, hot water should come from the “hot” tap, cold from the cold.) Be as thorough as possible so that anything under warranty can be corrected immediately, not at great cost later. Finally, confirm that all your preferences for interior treatments have been met. If any of the materials and colors used to adorn your home are incorrect, inform your builder at once. Ask your painter to leave leftover paint so that you have a color match if you need to touch up nicks and scratches—a virtually unavoidable part of the building process. Your builder should create a “punch list” of concerns or unfinished items that you both agree need attention, then he or she should coordinate the necessary help and set a time frame by which you may expect completion (typically 10 business days). Make sure that you have warranty booklets and service contacts for the various manufactured products, and, if possible, obtain a homeowners manual from your builder for general reference. If after the walk-through you discover any problems that are covered under warranty, inform your builder right away. Otherwise, the discrepancies you fail to report will remain with you until you fix them. Once you have thoroughly investigated any problems with your new home, it is ready for a local inspector’s test. An inspector’s visit can cost upwards of $400, so make sure he or she has the following credentials: membership in the American Society of Home Inspectors, strong knowledge of local codes and ordinances and experience with new methods in residential construction. Schedule the inspector’s visit as close to your own orientation as possible, and request an itemized report of problems or concerns. This will offer you the opportunity to discuss these items with your builder in a timely manner. With a few final checks from you, your builder and an outside inspector (or two), this brand-new house will be that much closer to being your home. |
| What to note at the walk-through Here’s an abbreviated list of what to review when you tour your new home (some items apply to several rooms in the home):
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The closing
| If
everything goes as planned, the closing of your home will start on
time, progress with no surprises and end in celebration. Of course,
achieving the American Dream is an ongoing process that requires much
planning and effort. The same planning and preparation that went into
the construction of your new home will benefit you at your closing as
well. And a happy closing will be well worth your time, since your home
and mortgage may remain with you well into the future. To become the official owner of the home, several transactions, legal documents and signatures are required. The function of the closing is to finalize your loan, to actualize the sale of the home from the builder to you and to disburse the pool of money to the appropriate parties: the real estate agents, the attorneys, the title company, the surveyor and anyone else involved. The title is transferred and the loan is recorded against your new property. For a smooth closing, contact your insurance company. Make sure they have delivered the policy to the title office. Ask the mortgage company to send the paperwork to you in advance so that you can read it before signing. Bring any money needed in the form of certified funds, such as a cashier’s check. Don’t use personal checks. Confirm the address and directions to the closing site. Settlement agent The closing may also be referred to as a settlement or a close of escrow. A settlement agent coordinates your closing. Depending on where you are building, this agent may be a lender, a title company, an attorney, a real estate broker or an escrow company. The agent is responsible for ordering the title work and property survey, as well as organizing all of the paperwork for the closing itself. Closing documents At closing you will sign and receive the documents necessary to claim ownership of your new home and close the loan from the mortgage company. These documents may include the following: Deed This conveys the home and lot to you. Promissory note This note is from you, payable to the lender in the principal amount of the loan, plus interest. Mortgage or deed of trust Holding your home as security, the mortgage is the repayment of the promissory note; if payments are not made, you risk losing your home. Title insurance commitment Title insurance is required to protect the lender if the title search missed anything. To protect your interest, you should also request an owner’s policy. Builders’ limited warranty or insurance-backed limited warranty Unless you entered into a rental agreement with your builder and moved in early, the limited warranty begins on the date of closing. Covenant-protected community If your new home is in a covenant-protected community, your closing should include a review of the covenants, conditions and restrictions established by the homeowners association, in addition to its bylaws and articles of incorporation. Closing expenses Your complete charges and credits are itemized by the closing agent on a standardized form called a HUD-1 Settlement Statement. The Real Estate Settlement Procedures Act entitles you to review this completed form 24 hours before your closing. All you have to do is request it. The amounts you paid in the process of applying for the loan or building the home will show up as credits to you on the form. Common closing cost items include the following: Real estate commission This is the dollar amount, usually expressed as a percentage, of any applicable real estate commissions. Loan items These items relate to your new loan: Origination fee This fee is a percentage of your loan amount, usually 1 percent. Although commonly paid by the homebuyer, this is a negotiable item between the buyer and builder when the contract is signed. Loan discount or points You pay this charge for interest up front, thereby reducing the interest rate on your loan. One point equals 1 percent of the loan amount. One point reduces the interest rate about 1/8 of a percent. Appraisal fee You pay the cost of appraising the property, which is set by government-assured Veterans Administration (VA)- or Federal Housing Administration (FHA)-insured mortgages. Credit report If you paid for this report when you applied for your loan, it will appear as a credit on your HUD-1. If not, you will pay for it now. Lender’s inspection fee This amount covers the cost of a lender employee or outside agency inspecting your home during construction, at the point of each draw (the procedure for paying bills during construction) and upon completion. Mortgage insurance application fee If you have a conventional loan and are making a down payment of less than 20 percent, you must pay mortgage insurance. Affidavits or endorsements For protection, more lenders are obtaining written confirmation that the property and buyers meet all the requirements. Lender prepaids The lender collects funds for several categories in advance, such as mortgage insurance (if applicable), hazard insurance, taxes and interest. These can include interest on the loan, a mortgage insurance premium, a hazard insurance premium and reserves, which are held by the lender to pay future liabilities. Title charges The Uniform Settlement Statement itemizes the charges for the work involved in transferring title to a property. Expect to pay a closing fee, homeowners association fees (if applicable) and other charges, such as courier services and the cost of the house itself. Once the paperwork is completed, you can replace your pen with the keys to your new home. It’s time you started enjoying your American Dream and living happily ever after. |
| Preparing for the close Preparation is key to a smooth closing. Here is a brief checklist to go over before you close:
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Moving into your new home
Your final destination
| Even
the most well-ordered household gets turned upside down during a move;
getting organized is the first order of business. One room at a time,
sort every item into one of three categories: either Pitch it, Give it
away or Keep it. Everything in the first group can go straight into the trash. Be ruthless! Extra weight means extra money if you’re hiring a moving company; if you move on your own, ask yourself whether an item is worth packing, carrying and unpacking. Your move is an opportunity to start fresh. Purge your files. Trash soiled or frayed linens—or better yet, put them to one last use as padding in boxes of breakable items. Ask yourself whether you’ve used each non-seasonal item in the last six months. If so, keep it. Seasonal items like holiday decorations and lawn and garden tools earn a place in your new home if they’ve been used once in the last year. Give away or sell things that still have some wear. Take a look at each object’s condition, and package up what can go to the charity of your choice. Donations are often tax-deductible; ask for a receipt when you make a drop-off. Alternatively, holding a yard sale before your move will lighten your load and earn you a few extra dollars. Once a room is cleared of clutter and unused belongings, you’re ready to pack. Boxes of appropriate sizes and strengths are available from your moving company, which, of course, will be pleased to pack everything in your home if you choose. Some companies allow you to pack all of your belongings, while others will pack only china, glassware and objects like lamps that need special attention for you. Pack boxes according to rooms and label them clearly so your movers can deliver each box to the correct room. It’s never too early to begin sorting and packing household objects that you don’t use every day. To keep track of other moving details, create a time line. Websites such as www.bekinsmoving.com and www.mayflower.com include tips and thorough time lines for the countdown to moving day. Some, like Mayflower, will even record your moving date and e-mail you a weekly to-do list. Do your homework Moving requires not only skillful organization, but also thorough research. Knowing what to look for in a mover can save you time and money. Once you’ve established a moving date, compare notes on moving companies and book one by four to six weeks before that date. You’ll find if you dig deep enough that not all movers are created equal, and you get what you pay for. Carefully review the rates and services provided by a few different companies. All moving companies’ services used to be the same; prices were the only distinguishing feature. Stiffening industry competition has forced many movers to offer a variety of service packages. Prices for services vary, but all are substantial enough to merit some planning. A full-service move from New York to California for a seven- to nine-room house will cost $8,000 to $11,500. That said, packing and loading yourself (many movers offer these options) will save you about $4,000 to $5,500. Feel up to renting a van and driving it cross-country yourself? The cost varies according to the size of the van; if you’re moving a seven-room house, plan on a price tag of between $1,500 and $3,000. Doing more of the work yourself will save you money, but weigh this consideration against easing an already stressful day, as well as the fact that movers are professionals trained to safely transport your precious possessions. Some companies won’t take responsibility for boxes that haven’t been packed by them or that are poorly packed. Besides evaluating each moving company’s services, it’s a good idea to research their track records. If you’re unfamiliar with a company you’re considering, make sure the U.S. Department of Transportation has issued the company a certificate of authority to move household goods through all applicable states. Your local Chamber of Commerce and the Better Business Bureau are both good sources to learn whether complaints have been filed against a company. Most moving companies provide liability protection or depreciated coverage, but finding a mover with insurance is rare. Meet with your insurance agent to see whether your current insurance plan covers your move, and consider buying additional, temporary coverage. Research can save you money on movers, and it also pays off come tax day: Many moving expenses are tax-deductible. Contact the IRS to obtain the necessary forms and to learn which receipts are important to keep. Create a portable file to your moving-related items, such as store receipts, business cards and important papers, such as contracts. |
| Moving—with children Time-tested parents offer these tips for moving your youngsters from point A to point B.
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A word about warranties
What’s covered—and what’s not: A primer
| Like
any product, your home should come with a warranty, which should
prevent any unpleasant surprises in the first years after your move-in.
For brevity’s sake, our discussions here will refer to builders’
warranties, but you should also be familiar with implied warranties (by
state law), contractors’ warranties, manufacturers’ warranties and
third-party insurance coverage to back the builders’ warranties. What’s covered and for how long Typical warranties from builders may cover workmanship, materials and structural defects. The warranty on your new home takes effect either when you close the sale or when you move into the home. Most builders’ warranties cover workmanship and materials for one year, but some builders offer warranties for two years or longer. Many builders also offer a warranty that covers structural defects for up to 10 years. Common structural defects include uneven floors and cracks in the foundation. During the warranty period, you’ll be glad that you chose a reputable builder, since normally there will be some problems to correct, no matter how skillful the builder is. Minor defects will probably be addressed at scheduled times, such as one, six and 12 months from the date of completion. Most manufacturers provide a warranty for the products (e.g., appliances) used in new homes. You will receive these warranties and owner’s manuals at closing. What’s not covered Typical warranties from builders do not cover problems caused by such things as adverse weather, including lightning, floods and earthquakes; animal damage; your negligence or your failure to conduct proper maintenance. In other words, if you forget to change your furnace filter or repaint your home’s exterior, your builder is not responsible. Defects in any item that was not part of the original home may also be excluded from warranty coverage. Warranty claims Your builder may prefer that you call him or her whenever you have a concern that needs to be addressed. On the other hand, some builders will give you a list of contractors and their telephone numbers to call directly in the case of an emergency. Events that would qualify as emergencies include plumbing leaks, gas leaks and the total loss of heat, air conditioning, water or electricity. Roof leaks may be emergencies as well, but they must be repaired in dry weather. Severe storms may cause roof damage, which should be reported directly to your homeowner’s insurance company, since weather-related damage is probably not covered under your warranty. Defects that aren’t emergencies should be reported to the builder, who will schedule the necessary repairs. Builders like to remain “in the loop,” since they must know about customers’ complaints in order to monitor product quality and customer satisfaction. Structural problems can be costly and time-consuming to fix. If you notice uneven floors, cracks in the foundation or drywall, or ill-fitting doors and windows, you’ll want to contact your builder immediately to arrange an inspection. All warranties have limits. Ask about the standards to which the builder will adhere when determining the validity of warranty repair requests. Make sure that you understand and make good use of your warranty coverage, as part of your home care plan. Sources: Salant, Katherine, The Brand-New House Book, Three Rivers Press, New York, 2001; Scutella, Richard M. and Dave Heberle, How to Plan, Contract and Build Your Own Home, McGraw-Hill, New York 2000; Smith, Carol, Building Your Home: An Insider’s Guide, Home Builder Press, Washington, D.C., 1996; www.ownerbuilder.com; Binsacca, Rich, The Home Building Process: Everything You Need to Know to Work with Contractors and Subcontractors, Home Planners, LLC, Tucson, Ariz., 1999. |
