New Home Construction Services
Step 1 – Research What You Want In A New Home
Having a rough plan in mind before meeting with builders will help both you and the builder. There are lots of online websites such as houseplans.com where you can brows floorplans to find a layout you like. Things to also consider are:
- style of homes you are interested (ranch, 2 story, duplex, tri-level, quad-level)
- basement or no basement
- garage – how many cars and attached or detached
- lot size
- budget
- number of bedrooms
- number of bathrooms
- do you need city water and sewer, or OK with well and septic?
- fireplace needed?
Step 2 – Finding Your Lot
There are a lot of new home builders to choose from in the Ouray region. New home construction is one of our specialities. Each builder has their own build and sales process and we can help you navigate that process.
With some builders you can buy your own lot and then contract with them to build the home itself, however most builders prefer to buy the lot themselves and put the lot and the house into one contract. The reason for bundling the lot and the home together in really for the builder’s protection in that they own the entire project until closing day when they transfer the deed of the property (which includes the home built on it) to you as the buyer.
As an example of this scenerio, let’s make the company name of Craftsman Builders. We would sit down with Craftsman Builders to identify available lots that you would like to have your home built on. Once we identify lots you are interested in, we then make sure that the size and type of home you want to have built works for that lot. Many lots have restrictions on minimum square footage and required standards to buils in that area, and sometimes those requirements do not work for the type of house you want to have built. So, we work to find a lot and home design that works for you.
Step 3 – Contract With The Builder & Construction Loan
The next step is to put together a contract with Craftsman Builders. At this point you will need to put down a non-refundable deposit with the builder and secure a construction loan. Of course if you are paying cash, then you will not need a construction loan.
Now Craftsman Builders will buy the lot and begin construction. As the house progresses there will be progress payments where Craftsman Builders will submit a progress payment request to the lender, and the lender will send an inspector to comfirm the home is far enough along to make the next progress payment. A few progress payments usaully occur as the home is built, and then the final payment will be made a closing. Now Craftsman Builders is out of the picture (except for any warranty responsibilities they have) and you have the deed to your new home.
Step 4 – Converting the Construction Loan To A Conventional Mortgage
Converting Construction To Permanent Loan: Construction loans are intended to pay for the construction of your new home, but are not intended to be a long term loan. You wouldn’t want it to be a long term loan because the interest rates are higher than standard mortgage rates.
You can get a mortgage from whichever lender you wish, and then would refinance the the construction loan to the permanent loan. Some construction loans have an option to convert to a permanent loan, but those aren’t very common, and the terms of these converting loans usaully aren’t as good as standard mortgages.