If you want to build a home on a budget, your homebuilder will be your greatest ally. Working with your goals and financial plan, a dedicated builder will develop a personalized plan to maximize your vision. If you are just starting to explore the homebuilding process, start shopping around for an experienced home builder who is committed to great communication and flexible pricing.

1. Building a New Home

  • Choosing a Builder
  • Pricing
  • The Important of Communication

2. Construction Decisions

  • Customization
  • Lot Location
  • Spec Home
  • PreFabricated Home
  • Lot Types and Locations
  • Canal Lots
  • Buying a Lot
  • Building Materials

3. Spec Homes

  • What is a Spec Home
  • Is a Spec Home right for You
  • Advantages of a Spec Home
  • Disadvantages of a Spec Home

4. Special Financing Options

  • Saving Money On Your Mortgage
  • Understanding Mortgage Rates

5. Financing Options

  • Save Money on Your Mortgage
  • Understanding Mortgage Rates
  • Builder Financing
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Building a New Home

Find an Experienced Builder

When a tropical storm makes landfall in southwest Florida, or the summer sun beats down on your home for months on end, you’ll rest easy knowing your trusted your custom home to an experienced builder.

Unlike other industries that can skate by faking expertise, for home builders, the proof of workmanship is in the product. Even before you meet with a new builder, take the time to conduct preliminary research online. Do they showcase pictures of completed projects? Are they just starting to build homes or do they have a list of satisfied customers? Most of this information will be available on their website.

After conducting preliminary online research, bring any remaining questions to the initial meeting with the builder’s sales staff. Begin by verifying if they have all the proper state certifications, and taking time get to know the team. Remember, building a new home is one of the greatest investments so make sure you are comfortable with the team.

In your first few meetings with the builder’s team, ask if there are any models, current projects, or recently completed homes you can see. Builders love to show off their handywork and explain all the special way they delighted their customers.

Shop Around for Pricing

Since it can be difficult to gauge a competitive price, never settle with the first estimate. Multiple estimates give you a great frame of reference for negotiating the best value for your dollar. Once you gather multiple estimates, take the time to weigh the costs and benefits of each one. Although one builder may give you a better price, it may lack a make or break feature.

If you are having a difficult time weighing the different options, but you already found a builder you trust, don’t be afraid to set up a consultation to discuss options and features. Not only will they find ways to work with your budget, but it’s also a great way to establish trust with your builder; an essential goal for a multi-month project.

Communication is Key

Once you’ve shopped around for a builder, but before you sign on the dotted line, communicate all your needs and concerns with your home builder. Are there any special design features you want to include? Do you have any major pricing concerns or timelines restraining your budget? Get all of your questions answered before the build team breaks ground. If major design changes need to be made after the process begins, it will cost you time and money.

A builder who really values your time and money will not only answer your questions, but also ask you questions to clarify your wants and needs. Remember, a great builder is tries to make your dreams a reality in an affordable and timely manner. Accomplishing this task requires great communication and a trustworthy relationship.

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Construction Decisions Save Money

A great builder can save you money, but the price of a home is mostly determined by decisions you make during the planning process. These decisions include factors like construction materials and location. The more you know before the initial consultation, the better prepared you will be to save time and money.

Customization Options

Building a custom doesn’t mean you have to start with an empty lot. You can either start with the empty lot, finish a spec home, or opt for a prefabricated home. With a varying range of price and customization options, you can find the home to suit your needs.

Empty Lot

If you want the total customization experience, start with an empty lot and a custom builder. The builder will have a variety of custom blueprints for you choosing. Discuss the blueprint with your builder and be sure to mention if have any major design new design considerations. After settling on a design, everything from the floors to the countertops to the light fixtures will be open for your choosing. As you add and or upgrade different features, you can control or minimize the price.

Spec Homes

If you want a home on a quick timeline, ask about spec homes. Builder construct spec homes so they can have inventory ready to purchase. Spec homes are typically used as model homes, but sometimes builders leave the interior of the home unfinished so buyers can still customize the home to their wants and needs. Spec homes are perfect for buyers looking for a 60-90 turn-key solution, rather than waiting 6-8 months for the entire build.

Prefabricated Homes 

It’s impossible to compare today’s prefabricated homes with those of 20 years ago. For new constructions, prefabs are energy efficient, green friendly, well-built, and aesthetically pleasing. Although prefabs are an affordable alternative, the entire building process lacks the personalization and service of a completely custom build. Prefabs also lack the features and luxuries you may want in a retirement home.

Lot Types and Locations 

In the real estate world, there’s an old cliche, “location, location, location.” Even the most beautiful home will be worthless if it’s in an undesirable location. If you’re looking to build a home in southwest Florida, the waterfront locations make location doubly important if you are building a home on a budget.

Canal Lots 

Southwest Florida is a boater’s paradise. With its many miles of coastline and world renown fishing, buyers will pay a premium for a lot on a canal. As you can probably assume, it’s never just that simple. Different types of canals, have different access features and different price points. Finding the right combination of features to match your price point will be a matter of weighing the costs and benefits.

  • Saltwater vs. Freshwater Canals 

Not all canals lead to the ocean. Freshwater canals are landlocked, but they still give the homeowner access to different lakes and waterways. Saltwater canals are more expensive because they lead to the ocean.

  • Direct / Unobstructed Saltwater Access

Lots with direct saltwater access are even more expensive. Canals are deemed direct access if the boat never has to go under a short bridge or other obstruction. The obstruction restricts the homeowner from owning a sailboat or even larger boats.

  • Distance to Open Ocean Water  

The most expensive canal lots are a combination of direct saltwater access and a short distance to open ocean water. If a boat can be out on the open ocean in just a few minutes, rather than idling around canals for fifteen or twenty minutes, the lot will be even more expensive.

  • Do I Need a Canal Lot?

Comparing the prices of canal lots is a daunting task. Lots just down the road are worth tens of thousands of more dollars. If you still want to have a boat, but don’t want to pay the extra cost for a canal lot, think about purchasing a dry-lot home and keeping your boat at a marina. Your boat will always be safe with quick ocean access, and you won’t have to pay the extra expenses associated with dock and lift maintenance

  • Desireable Location 

In southwest Florida, the oceanside breeze may never be far away, but if you want to live on the sand, you’ll pay a premium. Furthermore, proximity to excellent schools and healthy neighborhood amenities also tend to be more expensive. Determining your exact needs will be a matter of weighing your budget against the positive and negative features.

For years, buyer looking for the best of seaside living at an affordable cost have flocked to Cape Coral. Even in the most inland parts of this small town, you are never far from the Gulf of Mexico, the waters of the Caloosahatchee, or any of the great amenities you expect from a friendly town.

Should I Buy a Lot First? 

It’s not uncommon for a buyer to purchase a desirable lot, and then save money for a few years before starting to build. Although this a great way to build a home on a budget in most parts of the country, in environmentally sensitive areas like Cape Coral, this can be a costly mistake. If you do not receive the proper zoning deeds, or if the endangered Burrowing Owls decide to make your lot their home, you won’t be able to build.

When buying a lot and building home in Cape Coral, trying to save a few dollars by purchasing your own lot in never worth the risk. Your builder will make sure you have a buildable property, and possibly save you money by financing the entire project from lot to build.

Building Materials

The easiest way to save a few dollars on your entire project is to pay attention to the details. Before you sign your contract, read through it line-by-line. Although it may be tempting to use cheaper outdoor materials to save a few dollars, remember, saving a few dollars today may cost you a lot of money in the long-run. If the salty air and Florida sun requires a roof replacement in a couple years, you’re just wasting your money and time.

If you want to save money on the interior of your home, compare the prices of standard and luxury features like countertops, flooring, fixtures, and hardware. Consider building with standard hardwares, and then upgrade to wood floors or stainless steel fixtures overtime. Although this may reduce your initial investment, luxury upgrade immensely help your resale value.

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Save with a Spec Home

What is a Spec Home? 

A “spec home” is a catchall term used to describe a home constructed without a particular buyer. Although it seems risky for a homebuilder to invest in a home without a buyer, they use spec home for a variety of reasons.

Many builders use a spec home as a model or feature home. This fully finished and furnished home gives potential buyers the unique opportunity to walk around a completed home and imagine living in the home. Other builders use spec homes to start building an inventory of move-in-ready homes. This is particularly popular in retirement areas like southwest Florida. By providing a homeowners with near 30-90 day occupancy, builders increase the likelihood of closing a deal before the buyer returns north in the spring.

If you find a spec home, chances are it’s already completed; from the blueprint to the print on the carpet, there’s little room for customization. If you do find a spec home still under construction, contact the builder to explore different interior customization options.  

In order to make these homes appeal to the widest possible market, designs tend towards sellability. Therefore, designs feature a mix of functionality and affordability. A builder may choose to invest in a special feature like wood floors or stainless steel appliances to add that extra appeal, but usually they hold to certain budget. If you want to upgrade certain features of your spec home, you can discuss certain options with you builder.

Is a Spec Home Right for You?

The home buying journey rarely begins with a buying looking for a spec home. Typically, a buyer finds a spec home while shopping around, and just like the builder hoped, they fall in love with it. If you just found a spec home, or you are just starting to look for a home, spec homes are great way to save money on your new home.

The Advantages of a Spec home

Marketable Investment 

When a builder decides to start constructing a spec home, they are quite literally staking their entire business on the project. If just a few spec homes fail to sell at a competitive price, the builder could go bankrupt. To prevent such a catastrophe, builders subject each spec home to rigorous market research. This market research includes questions about selling price, housing market trends, and overall economic trends. If the research doesn’t yield promising results, a builder won’t stake his reputation on a doomed investment.

Trust the Experts 

Home builders know what buyers want. After all, they construct more homes in a year than the average person will buy in a lifetime! By working with numerous buyers and interested browsers alike, they know the amenities you love, and the neighborhood you want to call home. A builder uses this knowledge to balance upgrades and aesthetics with location and features. The final result is a beautiful and desirable product at an affordable price.

See Exactly What your Money Buys 

One of the greatest benefits of a spec home is that nothing is left up to chance. There’s no floor plan you have to imagine. You don’t have to wonder if the cabinets and countertops will match. You don’t have to spend days working through a contract adding and subtracting upgrades. If you buy a spec home, you get exactly what you see; no questions and no secrets.

Knowing the final product will also save you time and money. Even after reviewing the contract line-by-line, you may still walk through the door and find the home is lacking an upgrade you never realize you wanted. Adding those changes after the project will increase the cost and extend the project time. If you find a spec home, you don’t need to pour over a long list of upgrades. The entire project is right before your eyes.

Immediate Occupancy

Building a custom home isn’t an overnight process. From consultation to keys, you can expect to wait 6-8 months. If you find a spec home, you can be in the door in just 60-90 days. The shortened timeframe of a completed build saves time, the most valuable resource. Immediate occupancy homes are popular among people looking for a secondary home. This is especially true in retirement-friendly places like southwest Florida. If you find a spec home in the late fall, you can spend your spring vacation under your new roof.

Immediate occupancy also makes spec homes popular among families looking to relocate. The short summer break provides only a brief window for the family to pack up and move to a new place. Rather than having to pay for a hotel in the new school district until the house is ready for occupancy, you can be home permanently in as little as a month.

Save Money on Custom Design

Everyone dreams of taking a blank blueprint and an empty lot and creating their dream home. It’s usually left as a dream because it is so expensive. Not only will you need an architect to give you vision a sound design, you’ll also need a builder who can implement your vision. Every time you bring another expert into the process, your project will get more expensive.

If you find a spec home, you can avoid these expensive and time-consuming fees. You may lose some of the customization, but you can be guaranteed you are getting a functional and attractive design. What you lose in customization, you gain in the life-sized floorplan. No longer do you have to imagine what a custom design will look like, but rather you can walk through the final version of your home.

Save on Financing

Since the 2008 financial crisis, banks have been wary of financing a builder’s spec homes. This requires the builder to take an even greater risk by financing the build out of his own pocket. Although this may be difficult for the builder, the savings is passed onto the buyer. Rather than using a bank, the homebuyer can opt for in-house financing. This is a great way to save money and build rapport with your buyer.

The Disadvantages of a Spec Home

Lack of Design Freedom

When you purchase a spec home, you are purchasing someone else’s vision. The location and lot were already chosen. The major design specifications were selected by the builder. Even elements like the outdoor color and the indoor cabinets were already installed. The lack of customization options deters some buyers, but others walk through a spec home for the first time and just fall in love.

Builders know buyers have apprehensions about spec homes. That’s precisely why they design and decorate these homes to appeal to a wide range of tastes and interests. In the end, it’s up to the buyer to decide whether or not the extra customization is worth the extra costs.

Must Pay Extra for Special Features 

Have you always wanted granite countertops and stainless steel appliances? Maybe you want wood floors and a screened-in pool? Although there are awesome spec homes with these special options, not all spec homes include these extra upgrades. Going back and installing those upgrades will incur additional costs. If you build a completely custom home from start to finish, you won’t have to worry about extra upgrades.

What’s the Best Option for a Spec Home? 

Anyone of these benefits or disadvantages may be a deal breaker for any potential buyer. In the end, nothing is more important than finding a trusted and experienced builder. They can get you into a home with the benefits you want for a budget you can afford. If you find a trusted builder, and you are still interested in a spec home, ask your builder about current construction projects.

They may have an unfinished spec home you can put under contract. Once you put the home under contract, you can take over the interior customization process. Sometimes creating your dream home is a matter of marrying a spec home to your own creative needs.

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Financing Options

Before signing, home buyers spend hours meticulously reading through their final contract. They swap out paint colors and exchange upgrade for standard features with the hope of getting their final contract below a certain budget. After days of thinking and hours of changes, they finally sign on the dotted line.

If all those hours are spent on the contract, not to mention the finding the right location and builder, why do buyers spend so little time shopping around for the best financing options? If you are serious about saving money on a home purchase, saving big will be a matter of saving a little bit every month.

Before you sign on that dotted line, make sure you spent adequate amounts of time finding the best mortgage for your budget. Shop around to as many credit unions, banks, brokers, online lenders, or ask you real estate agents and friends for suggestions. Also, if you are buying a new home, make sure to ask your builder if they will finance your purchase. Builders will work with your budget to get you a great rate.

Saving Money on Your Mortgage

Getting a home mortgage is more than just filling out a couple of online forms. It’s a rigorous process requiring a keen attention to detail. Follow these best practices to save the most time and money on your mortgage.

  • Take Caution to Online Forms
    • Before you start filling out all kinds of forms asking for the best rates, determine what kind of value the form can offer. Since it’s impossible to get an accurate rate without pulling a credit report, you may just end up with a broker bugging you with phone calls. Since every credit situation is different, find a trustworthy professional before you start giving away your information.
  • Get a Free Credit Report
    • A credit report is the most important factor for determining your mortgage rate. Before you start negotiating a great mortgage rate, get a free credit report online. The better your rate, the better contract you can negotiate, and the more money you will save every month. But remember, even if you have a great rate, you will still need to actively negotiate for the best rate.
    • Although you need to acquire your credit score, make sure you limit your mortgage search to a 14-day window. If you try and get a mortgage outside of that time period, asking for a credit inquiry will actually lower your credit score! Once you begin the mortgage process, your loan officer will advise you to not make anymore credit inquiries. If you do, it will adversely affect your interest rate.
  • Meet your Mortgage Professional 
    • Even in the digital world, nothing quite instills confidence like a good old-fashioned handshake. Before financing with your mortgage company, schedule a meeting with your mortgage broker, bank executive, or loan officer. Ask about their qualifications, verify their membership in your state’s mortgage professional’s association, and conduct your own online research. Finding a competent agent should be as important as finding a competent builder. This individual will handle your accounts and your paperwork for a purchase worth hundreds of thousands of dollars; make sure you trust them.
  • Give your Loan Officer all the Details 
    • After you find a loan officer you can trust, make sure to communicate your entire financial situation. Are you retired? Have you had a foreclosure or bankruptcy in the past? Are you self-employed? If you tell your loan officer these details ahead of time, they will be able to get your best rate quickly and efficiently.
  • Get the Right Documents
    • Ever since the 2008 recession, mortgage companies are asking for more and more documentation. If you ask your loan officer for a list of needed documents before the process, you will have time to collect everything you need. It’ll end up saving you time along the process.

Understanding Mortgage Rates

So you found a location, you found a trustworthy builder, gathered your credit score and financial documents, you found a loan officer, great! Now it’s time to start finding a mortgage rate that will save you money.

Should I Get a Fixed or Adjustable Rate Mortgage? 

Traditional mortgages are available in two forms: fixed or adjustable. With a fixed-rate mortgage, you pay a consistent interest rate for the entirety of the loan period. Even though the mortgage payment towards the principal and interest remain constant, insurance and property taxes will vary.

With an adjustable-rate mortgage, the interest rate will fluctuate. After you first sign your adjustable-rate mortgage, the rate will stay generally the same for anywhere from one to ten years. After the initial period, your interest rate is chosen by the bank.

Choosing the best rate plan depends on your budget. Adjustable-rate mortgages are a perfect option for people purchasing a second home as they near retirement. The low introductory rate gives buyers a few years to sell or downgrade their primary home before the monthly rate increases. If you are uncomfortable with the possibility of a rising rate, a fixed rate mortgage may be the best option. Determining the best option for your money is one of the key roles of a great loan officer.

What are Points? Should I Pay for them?

A mortgage point is an upfront fee that equals 1% of the total mortgage. If these fees are paid upfront, they lower the interest rate by a fixed amount. The rate is usually 0.125%. If you are building a retirement home, points are a great way to lower your interest rate.

If you are building a home on a budget, you can get negative points on your mortgage. With negative points, the lender reduces their overall fee in exchange for a higher interest rate. If you don’t mind paying interest overtime because you want to get into a new home immediately, negative points may be a good option.

Don’t Just Compare Rates 

When you compare financing options, don’t just compare the interest rates. Make sure to ask about all the fees including origination and lender fees. If a mortgage company touts “no-fee” loans, it really means the fees are included in the monthly rates

Pay More Upfront for a Lower Rate 

Are you are like a vast majority of Americans, you are probably going to buy a 30-year fixed mortgage. If so, you may be able to get a lower rate by paying more money upfront. On the other hand, if you plan on refinancing or selling in a couple years, an increased down payment may not be helpful.

If you cannot pay a sizable amount on your down payment, say 20%, you may need private mortgage insurance. This insurance is added to prevent the bank from losing money in the event of a default. As a buyer, you can get a home for less, but your interest rate - and overall cost - will be higher. Again, when building and financing your home, if you want to save money today, you will probably end up paying more down the road.

How Much are Closing Costs?

Closing costs cover the fees charge by the mortgage lender to pay for underwriting, processing, appraisal costs, title fees, and general overhead expenses. After all the charges are added up, fees generally amount to 3% of the final purchase cost of the home. Although this fee isn’t paid until closing, finding the best fee will be part of the initial steps of shopping around for a mortgage.

3. Builder Financing

Save money with Builder Financing. The fear of the financial crisis still looms over buyers and builders alike. Just as buyers left the keys to their underwater homes, builders lost valuable spec homes. To not only help buyers who are still dealing with repercussions from the financial crisis, but also to help buyers save money, strong building companies offer special builder financed homes.

What is Builder Financing? 

Builder financing is when a financially strong real estate group offers their own financing so you don’t have to use a bank or mortgage company. Financing directly through the builders is convenient, flexible, and it can save you money.

  • A Convenient Option
    •  Financing your home through a homebuilder is, above all, a convenient option. You won’t have to wait months for the bank, the title company, and the mortgage broker to communicate and approve your loan. This makes builder financing especially attractive busy buyers looking for a secondary home. You won’t have to take time out of your busy schedule to make sure this complicated process continuing without error. You can spend your time getting ready to start living in your new home.
  • Works with your Needs
    • At the end of the year, a home builders business depends on selling homes. It’s as simple as that. If the builder is financing the home, they don’t have to bring in banks and outside lenders into the situation. Rather than having to strictly enforce the banks regulations, the builder can meet work with a poor credit score or report. Whereas a lender may disqualify your purchase, a builder can work with your financial situation to get you into a beautiful new home.
  • Save Money
    • Above all else builder, builder financing will save you money. Since the builder knows all the construction expenses, they can set a competitive price. Builders are known to substantially reduce their price, or offer huge incentives if you use their own preferred lenders. Some builders will even throw in great extras, like free landscaping or stainless steel appliances, because you saved them time as well.
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Ready to Be Our Neighbor?

Builders, canal lots, spec homes, points, fees, mortgages… it sure can get confusing! That’s why nothing is more important than finding a builder you can trust with your time and money. We at SC Homes know we can be your trusted builder. We’ve mastered every aspect of the building process, from lots and blueprints to designs and finishes.

When we build a home in Cape Coral, we aren’t just building any home, we are building our neighbor’s home. If you’re ready for a builder who will work create the best home for your budget, call us today. We’d love to tell you more. Call us 239-424-9995

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*Pictures, photos, features, colors, and sizes are approximate and for illustration purposes only.