When you’re first getting started on your journey to building your dream home, the home construction process may seem overwhelming and out of reach at first. With so many steps and decisions to make along the way, surely the paperwork required throughout the process may seem like it could be never ending, right? Not with GreenStone Farm Credit Services!
Whether you are building your home yourself or contracting it out, here are the four main documents your GreenStone team will need at the start of your home construction process to keep your project running efficiently and on time.
Accurate Blueprints
After you’ve spoken to your loan officer and have been pre-qualified for your desired loan, you’ll then be ready to formally apply for your construction loan. The first item you will need to provide your lender with is the blueprints for your project. Whether you’re building a modular home, site/stick built, barndominium or log cabin, every project starts with the blueprints. Blueprints are what your lender and their appraiser will look at to appraise the value of your home, which determines the amount available for your construction loan.
Blueprints are also one item throughout the construction process that shouldn’t see many major changes. While you do have the ability to change your mind on things like the color of the backsplash in your kitchen, there is less wiggle room when it comes to changes such as the number of bedrooms and bathrooms.
These more serious changes could have a material effect on the appraised value of the home. Blueprints must also be approved by your local municipality to receive the permits needed to build. Keep in mind, there may be restrictions or requirements from your local building department regarding the size, style and finishes allowable in your area as well.
Dwelling Specifications
The second document you will need to provide to your lender are the dwelling specifications. This document itemizes the types of materials you will be using in your home and includes items such as flooring, cabinets, countertops, windows, insulation, siding and roofing, which are not readily apparent in your blueprints.
Dwelling specifications are important because they not only help the appraiser value your home but also remind you of the details around the pricing you need to determine for your budget. For example, if you have your heart set on custom marble countertops for your kitchen and you want to splurge on the material used for that part of your home, you may need to reduce your costs elsewhere to make up the difference in the extra cost for that specialty item.
Minor changes can, and likely will, come about during your build. As long as they are within reason and do not jeopardize the initial appraisal value that was determined for your loan, you can make adjustments to the materials you would like to use in your home.
Up-to-Date Sworn Statement
Once you have your blueprints finalized and the different finish of materials chosen for your home, it’s time to complete your sworn statement form. The sworn statement is an important document that monitors your budget, keeps track of all payments made to your suppliers and subcontractors and accurately tracks any changes in pricing during the building process.
Before and during your project, the sworn statement will keep you organized regarding what payments have been made to which contractor and supplier and will help your lender determine if you are staying on budget for your project.
Learn more about completing your sworn statement form by watching this easy-to-follow tutorial!
Signed Builder Contract
If you are working with a general contractor to manage your build, you will need to provide a signed builder contract to your lender. This document will outline the builder’s preferred draw process for payments, provide an outline for project management, establish the construction timeline, and provide clear guidance for the roles and responsibilities of each party.
Builder contracts are important to obtain because they provide information on the process of your home’s construction as well as to ensure all legal requirements are met such as the permitting, licenses and insurance coverages required.
The more information you can provide to your lender up front, the smoother the process will be! Any additional information obtained throughout the construction project should always be provided to your lender so they can stay informed and provide the best support possible throughout the construction of your new home.
If you have questions regarding what the home construction process entails or would like to learn more about the DIY home construction loans GreenStone offers, please don’t hesitate to reach out to your local branch!
