Picking your lender for a construction loan is often quickly done and many issues are overlooked. Remember this is your partner in building your house. You will be in direct constant contact with your lender through the process. Make sure you have asked every question possible before signing the paperwork. Banks are in it for the money. A good bank will be fair and have your best interest in completing your goal. Not all construction loans are structured the same way. There are so many different loans it is impossible for me to explain them all. For a quick tutorial of construction loans click here http://www.wikihow.com/Get-a-Construction-Loan-%28US%29
What I want to do is explain the process of looking professional to the bank. Getting your total budget number your going to ask for. Believe me the bank will most likely up your number if you qualify. They want to loan you as much money as possible. The bank also wants you to complete the house. The last thing a bank wants is to own a half built house. The bank believes that if you are under budget towards the end of the project you will splurge on items that you didn't plan on. This is where I liked to have two budgets. One for the bank and another for me. Stay true to your own budget. Every little bit counts and there are a lot of steps to building a house. If you go over a little on every step it will add up quickly. The key is to get good estimates from the beginning. Now that you have picked your house plans its time to put them to work. First thing I would do is send my digital format house plans to lumber company's. Pick at least three well known lumber company's and ask for lumber package bids. A lumber package for a house is a big budget item so search around.
From my experience most subcontractors like framers, foundation, electrical, etc like to have a hard copy set of plans to make their estimate on. This is why I said to have at least 4 copies of plans. Depending on your area you may have to submit two plans for permits. This leaves you with two sets. One for you to keep and another to take to each subcontractor and get bids. If you have more then 4 sets you can get multiple bids at the same time. Just remember always keep a set of plans for yourself.
Looking good to the bank is important and organization plays a big part. Buy a large three ring binder with tabs http://amzn.to/1R1rIpV . Your going to need to buy at least 10 sets of organizer http://amzn.to/1O8uRQ6 and some clear sheets http://amzn.to/1Xq2fJw . Get some clear business card holders and tab organizers that can be labeled for each line of work. http://amzn.to/1PJFawh . Once you receive all of this start labeling all your index tabs. Here is a example of a CostBreakdown spread sheet. Label each item on index tabs in your notebook. Put a couple of clear page holder sheets behind each title and card holders.
Now that you have your Notebook organized it's time to fill it up with bids. If water is not on the site make sure you get an accurate quote from the water district. Ask how much it will cost to run a water service to your property and if it includes the meter costs. On the power side of things make sure the transformer you will be hooking your house to can handle another house. If you have to pay the power company for a new power box you will want to include it in your bid. Get at least three bids on each item in the CostBreakdown.
Look at the bids in each section and carefully analyze. This is a great way to see what items may have been overlooked in one bid but are included in another. Lumber packages can be very different and some company's intentionally leave items out, so that they look like the lowest bid. Compare each section with competitors bids and questions will arise. Maybe the plumber bid on rough in plumbing but did not include trim out. Or forgot the toilets. Maybe one electrical co. included all led lights and the other did not. The more careful you inspect these bids, the better you can make a decision on what the actual cost is going to be. Now use the CostBreakdown spreadsheet and enter the highest bids into estimate cost area. Now take the lowest bid in each area and enter it into Goal Costs. Total both sections up at the bottom.
Finally you have a good idea on what your house is going to cost you to build. Also give yourself about 10,000 dollars extra for any mistakes made. Now I know the number can be scary but their are ways to save on each process and drop the price. I will be going over that in a bit. Just remember the more you can do yourself the lower the cost of your house.
Now you are ready to submit to the bank. Take your house plans, organized notebook, and dreams to the bank of your choice. They will have a ton of paperwork for you to go through. Hopefully you can get a low interest rate on the construction loan and fixed mortgage. Good Luck
Once you have submitted for your building permits take the time to look over the bids again. Analyzing all the bids will help you realize everything that you must pick out for your house. The finishes that you decide on will have a huge impact on the cost of your house. Having an idea of what you want before its time to buy, makes the process much easier. To get ideas for your house go to open houses, look at magazines, the internet, and hardware stores. For cabinets try to find a place that has the capability to do a virtual design. It helps to have a visual of the layout so you can see what it looks like. Have them print it out and take the design to other cabinet companies to compare prices. Having accurate details included in your bids makes it much easier when it comes time to order. Electrical design can also be done this way. Have a company draw out an electrical design with lights and switch locations in the house. Print this design out and take to other companies for comparison. Make sure your comparing apples to apples. The contractors needs to be bidding on the same quality and amount of materials. (Recessed lighting, LED, fixtures, ceiling fans, speakers, septic tank wiring, backup transfer panel, security system, etc. ) I saved a ton of money buying my own electrical fixtures and we will go over this later. The more detailed you are with these bids the easier it will be for you in the future. I know it is a ton of work but its well worth it.