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Building your dream house


You can have the house you&ve always wanted, but it will take planning, a talented architect, and an eye for detail.


Building your dream house

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Choose article section... Love at first siting: How to select a property What to consider when financing a custom home Paying attention—right down to the last detail 9 steps to building the perfect house Five helpful Web sites

You can have the house you've always wanted, but it will take planning, a talented architect, and an eye for detail.

By Michael Pretzer

When you're ready to build your ideal house, don't look to Carl Jung for an example. The Swiss psychologist started out well: He selected a site on the upper shore of Lake Zurich. But the house's construction proceeded in fits and starts. An addition here, a modification there. "I built the house in sections, always following the concrete needs of the moment," Jung explained. "It might also be said that I built it in kind of a dream."

Jung's abode took 32 years to complete—not exactly the dream most people have in mind when they talk about their dream home. You'd do better to follow the example of Carl Arentzen, a cardiac surgeon in group practice in Springfield, IL, and his wife, Kathie Kojis, executive director of a free health clinic there. They built a traditional shingle-style house on Lake Springfield; construction took 18 months.

Or look at Roger Greenberg, a surgeon in the San Francisco Bay area, and his wife, painter Mary Greenberg. They built a contemporary glass-and-concrete house with views of the bay and the city skyline. Construction time: 14 months.

That's largely because Arentzen, Kojis, and the Greenbergs didn't make Jung's mistakes. Unlike the renowned psychologist, the two couples each had an overall plan for their house, and they didn't act as their own architect and building contractor.

Love at first siting: How to select a property

When you build from the ground up, the ground takes on added significance.

But selecting land for your house can be tricky. How can you know that the acreage you have in mind isn't mostly quicksand, or that the property across the road isn't the future site of an outlet mall?

Consult an architect at the beginning of your property search. "It's tempting to look [on your own] for that idyllic location to build your dream home. But the property may present some distinct design opportunities and perhaps some hidden hazards," warns the American Institute of Architects. "Your architect can help you unmask the character and potential costs of a site—before you buy."

With or without the help of a professional, you need to answer lots of questions. Many of them have to do with the property's location:

• Is the property near amenities that are important to you? A golf course? A ski slope? A lake?

• Does the area have schools and houses of worship? Hospitals and health clinics? Parks and playgrounds? Police and fire protection? Roads and public transportation? An airport? Shopping? Trash pickup?

• Does the area have heavy traffic? Noise? Pollution?

• Is the weather too hot? Too cold? Too humid? Too many hurricanes, tornadoes, or floods?

Other questions pertain to the site itself:

• Are public utilities available? Can you install a septic system? Will you hit water if you sink a well?

• Is the land suitable for building? Is the terrain too rugged? Will the soil support a structure? Can you save some of the trees?

• Will the site offer views? Does it afford privacy?

• Do zoning ordinances or building codes put undue limits on the house you want to build?

• What future developments will occur nearby? Commercial construction? An expressway? An international airport?

• Are property taxes reasonable? Are there special assessments or other costs? At what rate will the property likely appreciate?

Then there are money questions:

• How much does the site cost?

• Will you have enough money left to build a house? To buy furniture?

The rule of thumb was once that the price of a house site ought to account for about 20 percent of the total budget. Nowadays, land costs are higher; 30 to 50 percent of the budget isn't uncommon.

"The single biggest mistake people make when building a home is to scrimp on the land," explains real estate writer Robert Irwin in Tips & Traps When Building Your Home (McGraw-Hill, 2000). "I've seen people buy the cheapest lots, acting on the belief they were saving money. Then they put up a huge luxury home. Mistake! After their home was built, they always regretted not having the nicer lot and envied their neighbors who had views, water, or golf access. And they had the hardest time reselling because, in effect, they had 'overbuilt' for their lot."

What to consider when financing a custom home

Financing a house that you build from scratch is trickier than buying an existing house with a 15- or 30-year mortgage. The possibilities:

• Land loans. Keep in mind that interest on a land loan—unlike interest on a mortgage—isn't tax-deductible. That's one reason many experts advise buying raw land with cash taken from savings.

If you do opt to borrow, note that a lot of financial institutions don't make loans solely for the purchase of undeveloped land. But there are exceptions. The Bank of America offers such a loan: 20 percent down, a 15-year term, typically for a maximum of five acres. You might also be able to get a loan from the landowner.

• Construction loans. While generally available, a pure short-term construction loan isn't advisable. To qualify for such a loan, you must have a permanent mortgage loan ready so you can pay off the construction loan as soon as your house is finished. Two loans plus two closings equal unnecessary expense and aggravation.

• Combination loans. Nowadays, many lenders offer a combination construction and mortgage loan. It's simpler than taking out two loans, and you pay for only one closing. "Ninety-nine percent of our loans for owner-occupied house construction are one-time closing loans," says John R. Meyer, an account executive with Bank of America.

Typically, a bank may lend as much as 80 percent of the appraised value of the land and the house you're planning to build. (You'll have to extensively document your plans—architect's drawings, your contract with a builder, and so on—to qualify for the loan and to aid the bank's appraisers.) Generally, the loan lasts for 12 or 18 months—usually enough time to complete construction. When your house is finished, the loan is rolled into a traditional mortgage.

Bank of America offers two types of combination loans. One is a construction loan that converts to a five-year adjustable-rate mortgage. The advantage, Meyer explains, is that you can lock into the going interest rate, rather than risk having to pay a higher rate 12 months down the road.

The other combo loan converts to a fixed 30-year mortgage. Instead of letting you lock into the current interest rate, Bank of America offers a 1 percent cap. For example, if the rate is 8 percent when you initiate the loan, your 30-year mortgage rate won't exceed 9 percent—even if the rate jumps to 15 percent while your house is under construction.

When you take a construction loan, the money is given to you—or to the builder or another third party—in increments, based on the progress of construction. Your monthly loan payment covers interest on the money you've received to date. The number of disbursements varies. Bank of America makes seven. The first one pays for the closing and what Meyer calls "soft costs," such as architecture fees. Before making the other disbursements, Bank of America inspects your site to see that the appropriate work has been completed. The final draw is held until you obtain a certificate of occupancy and meet other end-of-project criteria set by the bank.

Paying attention—right down to the last detail

"We are all searching for home, but we are trying to find it by building more rooms and more space," writes architect Sarah Susanka in The Not So Big House (Taunton, 1998). "But a house is so much more than its size and volume, neither of which has anything to do with comfort. What also defines the character of a house are the details, such as a beautiful stair railing, well-crafted moldings around windows and doors, and useful, finely tailored built-ins."

Roger and Mary Greenberg put a lot of stock in hiring the right people. They interviewed seven architects, then asked three to enter into what Roger calls "a minicompetition." The winner was Butler Armsden Architects in San Francisco. "Because we went through that process, we found an architect who could give us exactly what we wanted," Roger Greenberg notes. The couple was similarly careful in selecting a contractor.

While adjustments were made during construction—a floating wall intended to separate the living room from the dining room was jettisoned in favor of an open room, for example—the project came together without a serious problem or major change. "The problems I've heard about relate to surprises, which usually result from poor planning or poor selection of a contractor," says the surgeon. "Most physicians are pretty busy with their day job, but they need to put in one-on-one time with the people who are building their house."

Carl Arentzen and Kathie Kojis had some specific ideas about their new home. To realize their dream, they worked with the Chicago-based architectural firm Stuart Cohen & Julie Hacker. The architects and Kojis spent two years mapping out the residence. (Once the project was set in motion, Arentzen refocused on his practice.) Cohen & Hacker began by building a topographic model of the site; later, they added mockups of the house and boathouse. They made series after series of drawings, each a refinement of the previous set. As Kojis puts it, "Nothing was left to guess about. Periodically they would give us a stack of drawings to review. Usually the stack was almost an inch thick."

Arentzen and Kojis also carefully selected their builder. Michael von Behren Builder in Springfield wasn't the lowest bidder, but that didn't matter to the couple. "We hired Michael for his enthusiasm about the project, expertise, and reputation," says Kojis. "Plus, Michael's 81-year-old father is the grand old man of homebuilding around here."

Arentzen and Kojis' home was completed without major complications and cost only 7 percent over budget. (Twenty percent is to be expected, many experts say.) "I was ready for something horrible to happen," Kojis admits, "but it never came. We had a good team that worked together, and we planned, planned, planned before we started digging."

The author is the former Washington Editor of Medical Economics.

9 steps to building the perfect house

1. Prep work. Find the site, hire the architect and builder, determine the house design, set a budget, and obtain financing. This phase may take two or three times longer than the actual construction. Don't rush things; the decisions you make here have big ramifications.

2. Site work. This phase is literally the groundbreaking. Ready the land, clear out some of the trees.

3. Foundation work. The beginning of real construction.

4. Frame work. You'll begin to see the shape of your house and the placement of its doors and windows. Visually, progress will be dramatic, causing you to delude yourself into thinking that the house will be finished soon.

5. Rough-in work. Time for the subcontractors—the plumbers, electricians, HVAC (heating/ventilation/air-conditioning) people, and others—to prove their worth. To the untrained eye, progress will look slower. You'll set aside the foolish notion that your house will be completed ahead of schedule.

6. Inside jobs. Trim out the doors and windows, install the kitchen cabinets, lay down the flooring. Roll in the refrigerator and hang the bathroom mirrors.

7. Outside jobs. Apply the paint, stain, stucco, brick, stone, or maybe sheet metal—whatever it takes to protect you and your house from the elements.

8. Landscaping. Time to build the hardscape—swimming pool, fountain, walks, and patios. And to install the softscape—trees, shrubs, flowers, and sod.

9. Homework. Move in, enjoy, and crack the Home Maintenance 101 books.

Five helpful Web sites


Information about working with an architect from the American Institute of Architects.


Information about builders, building procedures, and residential construction statistics from the National Association of Home Builders.


Information on financing, house designs, and residential construction from the financial publisher HSH Associates.


Information about the building process; books, videos, and other resources; and questions and answers for anyone involved with residential construction.


Information about house design and links to house-building publications from Hanley-Wood, a leading business-to-business information provider in the residential and commercial construction industry.


Michael Pretzer. Building your dream house. Medical Economics 2001;17:44.

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