Home Improvement

Most new homes in America are built by builders or developers who build the new home with their own money or lines of credit in order to sell the finished home to the new customer. The new buyer simply obtains a regular “buy money” loan and buys the house.

This is the simplest form of construction financing. Of course, the builder’s borrowing costs are built into the price the new home buyer pays.

Increasingly, but, this form of financing is becoming rarer. Often, builders are becoming more reluctant to use their own funds to build for someone else as their banks are tightening their lines of credit and making it more hard and expensive for them to get the needed funds.

As builders become less likely to fund your new construction, prospective new home owners who wish to build a custom home are forced to fend for themselves when it comes to construction financing.

Enter the construction to permanent (CTP) loan.

There are a wide variety of construction loan choices out there. And many of them are woefully inadequate for most people – especially if you want to act as your own general contractor (known as owner-builder construction).

Local banks tend to be very conservative and will not even consider lending their money unless you fit exactly into their guidelines. This typically means having a fixed price contract with a licensed and approved builder, selling your current home prior to qualifying, and even making a large down payment or owning the land first.

Occasionally, a local bank will give you permission to be your own contractor, if you jump through enough hoops for them. They may require an extra large down payment or that you own the land free and clear before they lend you the money to build. In the end, most local bank’s construction loan programs will have one or more restrictions that make their programs unusable, more restrictive and even more expensive than a excellent alternative.

As an owner-builder, your search for a construction loan should be focused on finding the loan features that will best fit your scenario. Finding this type of program gives you the greatest chance of success and your best opportunity to save money on your project.

Within the world of owner-builder construction loans, there are only a handful of options that make sense. Some of the features that should be most vital are:

o Ability to be your own contractor without needing to make a large down payment – if any at all. “Large” means anything more than 5% for a conventional size loan and 10% for a loan up to ,000,000.

o No “consulting fees” or monthly “administrative” fees charged to you just for doing a loan. Please know, you need to expect to pay for an owner-builder loan in the form of origination or discount fees, but you should not also need to pay a consulting fee.

o No requirement to sell your current home before you can qualify for the new construction loan. Many lenders will force you to sell your current home before you start building the new one, meaning you will be forced to go twice in a small time just to get the loan.

o No payments, interest or other, while you build. The best CTP loans allow for an “interest reserve” to be built right into your new loan so you are not forced to make both your current home’s payment plus the new one. Most programs that allow for an interest reserve also allow you to choose to make the monthly interest payment if you want.

o No upfront or “application” fees. Avoid any lender who requires any kind of upfront fee or “deposit” of any kind.

o Easy draw administration and unlimited draws. This means easy for you, the owner-builder, not the bank or your sub-contractors. After all, if you can’t get access to and control your money, all the other terms really don’t matter.

o One-Time closing. The best construction loans allow you to close only once for both your construction funds and your permanent mortgage. This will save you several thousand dollars in the long run.

o A staff of professionals who know both construction and construction financing. Question the person you are speaking with how many homes they have built themselves as an owner-builder. If you are dealing with a loan officer who has never built his or her own home and cannot speak to you from specific experience, you should look elsewhere.

The importance of working with knowledgeable professionals cannot be stressed enough. Half of the battle is learning to question the right questions.

Note that the above list did not mention anything about construction interest rates. It is not that rates are not vital; it is just that they are among the least vital features of a excellent owner-builder construction loan.

This does not mean that owner-builder loan interest rates are necessarily higher than other construction loan rates – they will probably be about the same. But, who cares? It really shouldn’t matter to you if the interest rate during the period of construction is the same, a small lower, or even a small higher than a construction loan in which you are required to hire a builder.

Why? There are a couple of reasons, really.

First and foremost, you are seeking a loan that will enable you to save tens of thousands of dollars by acting as your own contractor. The tiny (and it is tiny) difference in interest you will pay over a six to twelve month period is meaningless when compared to what you will save by being your own GC.

Second – and this is vital to remember – despite the fact that every potential owner-builder is positive that he or she will build successfully on time and under budget, the reality is that owner-builder loans represent the most risky category of construction loan a lender can make. That is why there are so few available to start with. And, that is why you need to be prepared to pay a small more for the privilege of getting one of these loans.

Smart owner-builders know that they need to focus on that “huge picture.” Your goal is to build the exact home you want, your way, while saving tens of thousands of dollars. If the vehicle you need to reach that goal costs a small more, why should it matter? It is vital to remember that:

A) Construction loans are small-term loans and the rates are therefore tied to small term funds – typically the prime rate. As the prime rate goes up, construction rates* will follow. And, vice-versa.

B) Owner-builder construction loans are very risky and very specialized. Accept this fact and the fact that you may pay a small more for the privilege of having access to this type of money.

C) Your permanent rate, and the choices you have related to that, is the more vital thing to consider when looking at rates.

D) Rates are the least vital feature to shop for. Remember to focus on the features that will benefit you the most and help you accomplish your goal – the huge picture!

The smart shopper shops for loan features, not interest rates. The features that an owner builder needs are not necessarily the same as those a borrower hiring a general contractor needs. Refer back to the list of vital features above as you examine loan programs. And always remember that you are in charge during this process.

End carpentry and building hand railings has given me some fascinating and some times humorous experiences. I call this the DIY trap. With my experience the trap usually occurs with more advanced trimming projects like a hand railing. I have rescued a few homeowners out of this trap and here is one experience of the DIY trap.

I received a phone call one afternoon. It was a friend of mine he was very persistently asking me if I could help him out this week-end. We traded favors back and forth all the time so I agreed. The tale goes; his dad who is retired and is a modest DIY’er that had pretty much built his own house from the End carpentry and building hand railings has given me some fascinating and some ground up really needed the help. One of the last projects in this house which never got completed for years was the hand railing going up to the upper level.

One day his dad spotted a picture in a magazine portraying a gorgeous elegant hand railing and chose that this was the one to build in his house. Being the DIY’er he was he promptly started ordering all the materials with out doing any research or asking for help or advice. The materials for this hand railing came at a hefty price, as this was going to be a higher end railing but his mind was made up.

Soon the materials started arriving. He was extremely nervous to get started and had two weeks to end this project before leaving on a vacation. What happened in the next two weeks is typical of a homeowner relying on common sense to carry him through a project that requires research and knowledge that goes beyond common sense.

Now I know this man honestly well and he is the type of person who rarely loses his temper over anything. Needless to say my friend clarified the atmosphere around him over the past two weeks went from one extreme of being pleased and determined to a more tense and apparent aggravated state to a silent period and finally to utter misery, uncertainty and just pure disgust.

The DIY trap got him. He didn’t know what to do. He did not know how or even if he could go forward with the project yet he would not go back and redo what he did. He was extremely upset and disappointed by the time he and his wife left on vacation with expensive hand railing parts laying all over and worse yet an unfinished hand railing without knowing how to proceed.

My folks are gone and I want this to be a surprise my friend clarified. I was really pretty excited to do this project. I could save his dad from a lot of anxiety and I knew I could build exactly what he had pictured in his mind provided he had the same and right materials according to the picture.

I arrived on site, walked in the door to meet my friend and take an assessment of the situation. It was instantly apparent to me that his dad had struggled quite hard with what was done with the railing. String lines were place up apparently where the top rail would go, papers were laying around with math figures scribbled on them which I believe was  him trying to figure out the angle of the stair way. Two newel posts were mounted that were not sufficiently solid and sturdy yet had as many as 10 screws in each one. Other obvious evidence told me of the anxiety he must have gone through.

Unfortunately everything had to be undone and starting over was essential. Obviously he had no prior knowledge of this type of project nor did any research before or during the process. Let me see the picture I said.

Next we did an assessment of all the hand railing parts. Everything seemed to be there and match the picture also we were able to reuse nearly all the materials. Nearly is the key word. Unfortunately a critical error was made when he was measuring for the top rail and he cut it too small for the span we needed to cover. No wonder he was upset. Off to the lumber yard we go to see if we could match this certain style of hand railing as I don’t believe a wood stretcher is invented yet.

Yes, we were able to get a close match but it was a costly mistake. This particular piece of top rail was for the length we would need. This was at the time a style that I had never built before. It had a variety of different decorative iron balusters with a wood top rail and of course wood newel posts. We went back and built this hand railing and it turned out extraordinarily nice. It was nearly a mirror image of the railing in the picture.

My friend and I were extremely pleased with our work when we were finished. I had to stand and look at it for a while as it never ceases to amaze me the feelings of pride and accomplishment every time I build one of these. More importantly was the feelings I got when I ran into his dad shortly after. He could not say thank you enough and I had earned a type of respect and friendship with him that is indescribable. All in a days work helping people out of the DIY trap.

If you are considering building a chicken house yourself, there are many factors which you should take into account before you start. Whilst a DIY chicken house can be a fantastic alternative to buying an expensive ready made version, getting it incorrect can prove costly in terms of wasted materials, wasted time and miserable and possibly unhealthy hens. Done correctly though, a DIY pen makes brilliant economical sense and can work out at a fraction of the cost of a pre-built one.

Although building housing is not as simple as hammering some wood and wire mesh together, it can be surprisingly simple providing you follow some tried and tested chicken pen plans. You need to consider which materials you will use, whether insulation is required, what ventilation is needed, where you will site it, the design and positioning of nesting boxes, perches and protection from the extremes of the weather and predators.

Suitability of materials is vital when considering building a DIY chicken house. With regard to the wood used, it should be strong enough to withstand the harshest of weather and if it is pre-treated, you should ensure that the wood protector is animal-friendly. Any mesh which you use should not be of the flexible, thin type as this can easily be bitten through by foxes and other predators-indeed you should be seeking out the heavy gauge variety.

When you are building a chicken house, the siting of it is very vital. It needs to be near enough to the house so that feeding and egg collection are too not too much of a chore, but just far enough away that the inevitable smells and flies in summer are not constantly entering your house. In addition, you may wish to ensure that it catches the sun for part of the day as this will help eliminate any dampness caused both through cleaning and through inclement weather.

Ventilation is an vital consideration and you will find that most pre-built coops have circular drilled holes at the rear of the sleeping/nesting end which are very often meshed for safety. The ventilation is vital not only for keeping air circulating in hot summer months, but is vital for preventing a harmful build up of gases from the hen’s waste products.

With regard to the nesting box, you will need roughly one nesting box for each 4-5 hens (don’t make the mistake I did when first keeping hens when I carefully tried to squash 6 nesting boxes into the coop-one for each hen!). This should be something which is easily cleaned. One excellent solution for those making a DIY chicken house is to use a sturdy ancient cardboard box, which can be changed and disposed of every week or so. Another excellent alternative is to use a plastic cat litter tray which can be hygienically cleaned each week and will last for years.

As hens naturally like to perch, it is essential to provide a simple roosting pole in the sleeping/nesting area. In addition, you might like to consider placing a large branch in the outdoor section of the pen for them to perch on.

As a chicken keeper and retailer of chicken housing myself, I was looking for thoughts to incorporate into my own designs and this lead me to a book by Bill Keene, a fellow chicken-lover! His designs were so simple that they were nearly as easy to construct as my own self-assembly coops were to place together! I have since recommended his book to numerous customers who were looking for chicken pen plans themselves and all have been delighted by both the simplicity and quality of the designs. In addition, it has been shown that building your own housing can save over 50% of the cost of a comparable flatpacked pen and even those with very small experience in DIY can follow the instructions in the book with ease. To take a look at the different options which are available, please visit DIY Chicken House Plans.

Home Quick Planner includes 700 pre-cut, reusable peel-and-stick, 1/4-inch scale furniture and architectural symbols, plus 5600 square-foot floor plot grid sheet. Google “Home Quick Planner” for purchasing information.

Examines what green remodeling is and how home builders are working towards environmentally friendly housing projects when building homes. Green remodeling is the techniques used in making informed decisions when you’re looking at a remodeling project that’s going to give you a project that is earth friendly. Environmentally friendly building tips from Build TV. www.remodeling.hw.net