By ROBERT IRWIN

Question:  I am thinking about building a home on a lot I hope to purchase in a good school district.  Is building a house on one's own lot better than buying a new home from a developer?
-- Vani, Piscataway, N.J.

Vani:  Locating in a good school district is a necessity whether you build or buy. I have done both, and prefer to build my own.  Keep in mind, however, that building isn't for everyone.  It is a challenging experience, and unless you are fully prepared physically, mentally and financially, you might not be successful.
If you do decide to take the home-building plunge, remember that there are
everal stages to the process.  Here are some of the more important ones:

  • Securing the lot.  Often you will need to purchase the lot with your own funds.  Be sure to check it out thoroughly with a survey, title report, soils report, and other geological reports as necessary.  Also be sure you have ingress and egress (a road into and out of the property that is deeded to you), utilities and other rights to develop.

  • Obtaining financing.  You will need to demonstrate to a lender that you are capable of building.  Often this means hiring a contractor -- or at least a carpenter with a contractor's license.  Be sure you get all the money you need up front -- even though it will be doled out as work
      progresses.  Also remember to secure a good take-out commitment for a                 
      permanent loan to replace the construction loan when work is completed.

  • Hiring contractors.  You can either hire a general contractor to do it all, or cut about 15% to 25% off the cost and hire subcontractors yourself. Keep in mind that handling the overall project yourself is a formidable task.

  • Building the home.  Don't plan on taking any vacations while the work is being done.  Plan on negotiating with contractors, materials suppliers, building inspectors and a host of others.  It is a full-time job.

The results will hopefully be well worth it.  There are few things in life more
satisfying than moving into a home you built yourself.  For more information on the home-building process, check out my book "Tips and Traps When Building Your Home" (McGraw-Hill, 2000).