Farm Credit Construction Guide - Farm Credit Mid …

[Pages:57]Getting rural right.

TABLE OF CONTENTS

INTRODUCTION:

Financing your rural home ? Getting rural right

SECTIONS:

1 The basics ? Important tips to get you started 2 Loan management ? How it works 3 Land and foundation ? Understand the land and the building process 4 Pipes and wires ? It's different for a rural property 5 Wood and glass ? Combining your style with durability 6 Exterior ? Beauty that lasts

INTRODUCTION

Financing your rural home

When you're ready to start building your dream home in the country, you'll need someone on your side who can work with you to make sure your rural living dreams become a reality. At Farm Credit Mid-America, we've helped thousands of dreamers just like you build their rural homes, because rural is what we do.

We specialize in virtually all forms of rural lending, including some loan products that can be difficult to find at traditional banks and lending institutions. Among our specialties are rural home construction loans, rural land/lot loans and rural home mortgages for homes on more than 5 acres.

We look forward to talking with you about your rural construction project. Until then, here are a few common questions that our new customers have: Q Your name is Farm Credit; do I have to be a farmer to get a loan? A No, if you own at least 5 acres or are looking for lending in an area that has a

population of 2,500 or less, Farm Credit may be right for you.*

Q Are you a mortgage broker? A No, Farm Credit is your lender. In fact, Farm Credit maintains and services every

loan for the life of the loan ? no exceptions.

Q I've never heard of you. Are you new? A Farm Credit is almost 100 years old, and is a $20 billion lending institution.

You may not be familiar with us, but if you ask your future neighbors, they'll probably tell you that we're a fixture in the community, and they have worked with us for years.

Q How are you different from other lenders? A There are a lot of unique things about buying or building property in a rural area.

What sets us apart is that this is our specialty. Lending to rural America is what we do. This concentrated focus allows us to develop products and services tailored to our unique audience.

*Credit subject to approval. Farm Credit Mid-America serves Indiana, Ohio, Kentucky and Tennessee.

INTRODUCTION

Financing your rural home

Why finance your rural home construction with Farm Credit? We offer a convenient onetime loan closing. That means you pay one set of closing costs and go through the application process once. Our construction loans give you 12 full months to complete your project, and a very convenient draw schedule that will keep your contractors paid and help keep your construction on schedule. Once your project is complete, you can convert your construction loan to a traditional mortgage without costly refinancing fees.* Call Farm Credit at 1-800-444-3276 to discuss a financing plan for your construction project, tailored to your unique situation.

*Credit subject to approval. Conversion of construction loan to permanent financing is subject to a onetime fee of $350.

1 THE BASICS

1 The basics

Welcome to the rural life ? "your corner of the world." You own a piece of land in the country. Now what? Here are some tips to get you started.

BUILD A TOP-NOTCH TEAM

Remember that building a home is a collaborative process. One of the first steps is to secure financing, and Farm Credit is here to help. Contact your local Farm Credit branch to learn more and make us part of your team. Interview several architects and contractors, and ask them if they've built a rural home similar to the one they'd build for you. Speak to homeowners who have worked with the builders. That way, you can assemble a strong team that knows and understands your needs.

BUDGET

Talk to contractors to get estimates based on similar homes. You can also take the price of a newly constructed home of a similar size and style to what you want, subtract the cost of the land and divide the price by the square footage. That will give you the cost per square foot, and you can use it to estimate how much your home will cost, given the desired size. Remember to factor in special features and the costs of inspections, permits and appraisals.

JOB COSTS

Be sure to have plenty of cash reserves on hand. A typical construction deal can require a good deal of money out of pocket, and final construction costs could run as high as 10 percent over your initial budget. You should know where that money will come from before you build.

PERMITS

In order to build, your contractors will need to obtain permits, including but not limited to a general building permit and permits for electric and plumbing. Usually, your general contractor will take care of getting permits and scheduling inspections, but as the owner, you are ultimately responsible for making sure permits are opened prior to work being initiated and closed when work is complete.

ZONING

Contact municipal, county and state officials regarding zoning laws that could affect your construction. Ask about future zoning of your area, which could affect your property's value.

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