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Money Saving Steps for Home Builders

Compeer Financial
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Home > Education & Events > Money Saving Steps for Home Builders

As people start their journey towards building their first home, there are many things to consider. I have found that the three below often get missed. These items affect the outcome of the Sworn Construction Statement. If not in proper order, it could cost you extra time and money.

Find an architect or local drafting service to draw up house plans
Working with an architect or local drafting service to draw up your house plans enables you to get bids from more than one contractor and compare costs. Ask around for local architects to work with and check with your lender for recommendations. Some builders and lumber yards may have their own drafters. Verify that your architect draws up plans to scale. If you don’t have a plan drawn to scale, it will be difficult for builders to give you an accurate cost to build. Having accurate bids, along with the house plans, helps the appraiser give an appropriate value to the home. Submit your house plans to a Contractor and Appraiser Contractors. They will be able to give you more accurate bids based on house plans that are drawn to scale.

Additionally, appraisers will also need to see the plans to gain a better understanding of the home being built in order to give it an appropriate value. If any changes are made to the plans or bids, they need to be resubmitted to the appraiser and could affect the overall value. Gather written bids for the entire project including labor. You’ll want to make sure you have all the costs accounted for so that there aren’t surprises when building your home. If you decide to do some of the work yourself to save money, the labor and materials still need to be accounted for. However, doing the work yourself isn’t for everyone. When hiring out, you should have the funds needed to do the job without concern of going over budget. It can be easy to go over budget, so it’s best to account for all possible costs up front and hopefully come out below budget.

Complete a Sworn Construction Statement (provided by Compeer Financial)
An important step in your construction project is ensuring your Sworn Construction Statement is as accurate as possible. A Sworn Construction Statement will give you the complete picture of all of the costs associated with new construction, so nothing is missed. If something gets missed, it could potentially create cost overruns during the construction phase that weren’t originally accounted for. The Sworn Construction Statement lists all the possible costs of new construction and can act as a guide to make sure all bases have been covered. In this document, you input all of the costs from your bids to get a total of what it will cost to build your home. Make sure every section of the document has an amount listed to account for all of the items needed for construction. Once the numbers are entered into the Sworn Construction Statement, take the total times 10% and input this number in the contingency field on the statement. Add this to the construction costs for the grand total for construction. The contingency is used in case there are any cost overruns during construction and funds can be pulled from this account. Typically Compeer Financial requires 10% as a general rule. If these funds aren’t used, once the home is complete, the borrower can get the funds back or apply the funds to their principal loan balance to lower their monthly payment.

Sign and date the Sworn Construction Statement and Construction Agreement
The Sworn Construction Statement shows Compeer that you have agreed to these costs and that they are accurate. If you’re working with a General Contractor they will need to sign and date the document as well. The Construction Agreement document describes the construction disbursements/draws in detail as well as the interest rate options. For more in depth information on how to accomplish these items, contact a Compeer Financial Lending Officer who can provide expert guidance on building and financing your new home.
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