First Steps

The first major steps will be setting a budget and finding the right architect. Thus my goal this week is to set up meetings with our banker and at least two architecture firms.

The budget for the house will be based mostly on how much the bank is willing to give us for the "end loan".  Financing new construction is a two part process.  The first part is the construction loan.  A construction loan is a short term loan (usually 6 months) used to pay for materials and labor while you build the house.  After each phase of construction is completed a representative from the bank will come out to confirm that the work is done and then the bank will issue a "draw" or the money necessary to pay for what has been finished.  This process of course is meant to limit the risk to the bank.  They won't just give you a check for the whole amount up front and then tell you to go build something.  Construction loans are inherently more risky than mortgages because there isn't tangible collateral.  The bank could get stuck with a lot and a foundation which would be difficult to sell to get their money back.  The nice thing about these loans is that during construction you only make interest payments and only on the money that has been dispersed to that point.

Because the construction loan must be paid off in full after the 6 months are up you need to have a mortgage lined up for that purpose.  This is the "end loan".  The two loans are often written by different  areas of the bank or even two different banks.  Because of this, the entity writing the construction loan wants a guarantee up front that you will be able to pay them off at the end of the build.  This means being approved for a mortgage equal to the amount of the construction loan. So ... knowing now approximately how much we will qualify for will determine our budget for the project.

Finding the right architect might be the most important part of this entire endeavor.  We will need someone who can bring all of our ideas together in a cohesive and beautiful manor.  Trust me, Wendy and I have LOTS of ideas but there is a reason I failed out of the architecture program at CMU!  We want someone who will listen closely but also bring a lot to the table in terms of ideas and inspirations.  We will also most likely need someone who can act as an advisor during the construction phase.  If I GC this myself I will want someone with a lot more experience that I can get guidance from.

I already have two firms picked out in the Rochester area that look interesting.  Ideally I will find another one or two that I can interview.  Interestingly, there are not a lot of architects that specialize in residential design.  I read that today only 10% of all new homes are designed by an architect.  Most are built from stock plans or are drawn up by draftsman that work for the builder.

Finally it is time to begin!  I'll let you all know how week one goes and if I accomplish either of my two goals.