Understanding the Building Process

Construction of your new home can be both fulfilling and challenging through the process of contracting.  This is not a “built with your own hands” kind of project.  Although it may sound fun to tackle, most of us would never finish the project.  A modular home or prefabricated home will come to the site in sections and be about 80 to 90% complete at the time it is delivered to the site.  The project is more of a assembly type project with some onsite work to finish it up.

Some people wish to save money by doing their own “self contracting“, which involves hiring professional contractors.  Subcontracting to have the major work completed.  Their job is to be the “general contractor” who will coordinate the construction project.  This requires a great deal of people skills and good organization.  Communication with the subcontractors is a big key for a project to run smoothly.  It greatly helps to have a clear understanding of the basic work that will be done by the subcontractors.  During this process, Legendary Homes is only a phone call or email away.  We are here to help make your project successful as possible!

Working With Your Lender

Finding and selecting a lender is one of the first and most important order of business to do.  It’s recommended that you find a financial institution that will provide both a construction loan and a mortgage together to avoid extra fees.  This is known as a “one time” close.  You only close one time so you save from having to pay a lot of the closing costs twice.  Plus theirs only one approval and no re-qualifications.  If you are looking at being your own general contractor, then you will also want to make sure your financial institution will allow that.

NOTE: If you don’t have much experience in construction, we recommend that you let Legendary Homes provide the complete “turn key” service!

First off, you’ll need to get pre-approved for a construction loan. You should get an idea of  the total amount they will loan.  This will help you in deciding what type of home you will look at as far as the size and additional options you will be able to afford.  They will now want you to bring a signed contract showing the floor plan, options and site improvements.  Once that’s done, the construction loan process can begin.

NOTE: Remember, the lender is the expert and it’s your job to listen and ask questions.  Get suggestions from them on what they recommend.

One of the first items required is a completed sworn statement.  A sworn statement is a itemized breakdown of what the project will cost to build.  Including the actual bids from the subcontractors and suppliers for the labor and specific material that will be used in the construction of your home.  The lender will require this so they can be sure you can actually build the home for the amount of money you want to borrow.

How The Loan Works

Once the lender approves the application, the construction loan can be finalized.  Once finalized the lender will issue the money towards the construction in “drawls”.  The lender will generally issue the first drawl at closing.  This will be for the deposit on the home and some towards the “on site” work, such as excavation to get the project underway.  Most financial institutions will charge interest only on the amount that has been drawn out during the construction process, but we do have a lender who offers “No Payments During Construction”.  Please contact us for details.

When being your own general contractor you will never actually see the money.  The lender will generally have a title company handle things such as verifying the work is completed, collecting lien waivers, and to pay the bills or they may issue checks directly to the subcontractor with your approval.  This can vary by the state you are in and the policies of the lender.

Your Role As Contractor

If you decide to take care of your own general contracting, you will need to do your part and come through on items like materials and scheduling.  Modular construction allows the process to move forward at a rapid pace with the scheduling of subcontractors.  The nice thing about the speed of modular construction, for both onsite and offsite, is the ability to have multiple tasks being able to take place simultaneously.

It’s your job as a general contractor to make sure that the materials get to the job site on time and that subcontractors are scheduled and communicated with in the correct order, that the work is done properly and that everyone stays on schedule and they know about any changes.

As a general contractor, you will deal with many people such as bankers, subcontractors, insurance agents, the building inspector and many more.  The building of your home will go much smoother if you are able to communicate and work will with each person.

Construction to Permanent Loans

Contact Legendary Homes if you need a lender.  Our lenders offer One Time close, One Time Approval, and No re-qualifications.

Our lenders specialize in low down payment Construction to Permanent loans Including the following:

• Down Payment as low as 3.5%
• Modular or Manufactured
• Gifts or land equity allowed for down payment
• No Payments During Construction
• FICO score as Low as 620

Call Todd at Legendary Homes (517)206-2435  for details

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