# Building your own home?



## Warren (Feb 19, 2005)

overanalyze said:


> Go to your bank. They will want plans, specs, and accurate costs. Get costs for all of it including what you will do. Then explain what you will do and they should give you credit for your sweat equity. They will send out a bank rep to make sure you are completing what you say you are before they out checks. I have done a major remodel on my first house and built my own current home like this. Kiss your nights and weekends good bye!!!


The way the sweat equity worked out for me:

When I went to close the construction loan and convert it to a mortgage, they wanted to give me a check for $36000. That was the amount of the construction loan that was not used. They said they normally just issue a check, and then make the mortgage the total amount. I declined and opted for the reduced mortgage. I was glad that my wife wasn't there to make that decision.


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## kubie (Oct 19, 2008)

your bank may ask for an appraisal to see how much they will loan ya.

think it was like 80% of the appraised value.

then use your sweat equity to get rid of that stinking pmi insurance, 

so make sure you sweat for more than 20% of the value. lol


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## Warren (Feb 19, 2005)

kubie said:


> your bank may ask for an appraisal to see how much they will loan ya.
> 
> think it was like 80% of the appraised value.
> 
> ...


They will want a better down than a promise of sweat equity. Gonna need a check for 20% of what the construction costs are. Credit for the sweat equity comes later. If something happens to you, the bank wants to know that the house can be completed by a professional for the amount of the construction loan.


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## Morning Wood (Jan 12, 2008)

Hopefully you don't go the route I have been going. Although an addition, it was started in 08. My father and I doing all the carpentry. So far I've subbed and will sub out- excavation, concrete, plumbing, electrical, ac, plaster, insulation, and paint. Not sure on tile yet. I started in 08. Electrical isn't roughed in yet. Haven't had a full blown framing inspection. I can't wait till this place is done. If it gets done.


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## Inner10 (Mar 12, 2009)

Morning Wood said:


> Hopefully you don't go the route I have been going. Although an addition, it was started in 08. My father and I doing all the carpentry. So far I've subbed and will sub out- excavation, concrete, plumbing, electrical, ac, plaster, insulation, and paint. Not sure on tile yet. I started in 08. Electrical isn't roughed in yet. Haven't had a full blown framing inspection. I can't wait till this place is done. If it gets done.


Don't build anything yourself if you ever want it finished. :whistling


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## BamBamm5144 (Jul 12, 2008)

kubie said:


> your bank may ask for an appraisal to see how much they will loan ya.
> 
> think it was like 80% of the appraised value.
> 
> ...


Do they base the appraisal off of the prints for the house?


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## BamBamm5144 (Jul 12, 2008)

Warren said:


> They will want a better down than a promise of sweat equity. Gonna need a check for 20% of what the construction costs are. Credit for the sweat equity comes later. If something happens to you, the bank wants to know that the house can be completed by a professional for the amount of the construction loan.


I believe I can my materials for around 75k for the whole house, not including concrete, foundation and that sort of stuff. I plan on about the same for labor costs. Sound right? 

In that case for 20% I would need 30k cash. If I had the land paid off, would banks use that for collateral?


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## Warren (Feb 19, 2005)

BamBamm5144 said:


> Do they base the appraisal off of the prints for the house?


They base it off of the prints and the specs you provide them. They check your numbers against some sq ft formulas they have for similar homes in the area. They want to make sure you include enough money to completely build a sellable property. That way if for some reason you 
dont hold up your end, the house can be completed according to the budget.


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## kubie (Oct 19, 2008)

Warren said:


> They will want a better down than a promise of sweat equity. Gonna need a check for 20% of what the construction costs are. Credit for the sweat equity comes later. If something happens to you, the bank wants to know that the house can be completed by a professional for the amount of the construction loan.


i never needed a downpayment for the construction loan.

when it came time to convert to a mortgage, the bank saw how much i borrowed and knew the appraised value.

i didnt need a down payment or pmi insurance, because the home was worth more than i borrowed


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## kubie (Oct 19, 2008)

BamBamm5144 said:


> Do they base the appraisal off of the prints for the house?


think it was like $300 for the appraisal.

all i gave him was the print (floor plan only), he asked some basic questions like

ext finish, cabinets, land value, just basic questions


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## TxElectrician (May 21, 2008)

BamBamm5144 said:


> I believe I can my materials for around 75k for the whole house, not including concrete, foundation and that sort of stuff. I plan on about the same for labor costs. Sound right?
> 
> In that case for 20% I would need 30k cash. If I had the land paid off, would banks use that for collateral?


I'm not a builder, just a lowly electrician, but check your numbers well. On my home, and a spec I did, the thousands were easy to budget. What I didn't take into account so well was all the hundreds. Could never go to any store without spending at least one or two of them.


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## cleveman (Dec 28, 2007)

Good luck with the sweat equity. My bank was always too conservative. I remember I built a house back in '99/'01 and ended up with about 80 in it and sold it later for 215. I was always telling the bank, "why don't you give me something to live on, so I can just continue doing this?" 

If you are working full time for six months to build a house, it is difficult to feed yourself and buy a new pair of boots every now and again.

Best to put the wifey to work and have her generate the money to cover the living expenses and you can concentrate on the big paychecks. It would be sweet to make 215-80 twice a year.


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## loneframer (Feb 13, 2009)

When I built my house, we owned the property. I had proposals for every aspect of the job, including the ones I would be handling. I had material estimates right down to cabinet pulls and door bumpers. We had 90K in available assets and two incomes. They can be finicky if you are self employed and a 1 income family.

The bank gave us a loan based on estimated cost and also gave consideration to comp. properties in the area. 80% of estimated construction cost was their loan threshold.

I arranged a mortgaged account with my lumber supplier, which gave me 90 days interest free on materials. They were cut a check directly at the settlement table during the first draw of the construction loan. The draw payment is based upon the completed work, as per original estimated costs turned in during the application process.

Once the first draw is paid, interest on the construction loan commences. We held off as long as possible to avoid the interest charges on the loan, without paying interest to the supplier.

There is a settlement fee for each draw of the construction loan, so the fewer the better.


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## Warren (Feb 19, 2005)

BamBamm5144 said:


> I believe I can my materials for around 75k for the whole house, not including concrete, foundation and that sort of stuff. I plan on about the same for labor costs. Sound right?
> 
> In that case for 20% I would need 30k cash. If I had the land paid off, would banks use that for collateral?


Yes, the land counts for part of the home value. In many cases the lot value is equivalent value to cover the 20%. The labor and material costs will need to be broken down. You can't just say $75000 materials, $75000 labor. Gonna need to do it trade by trade.


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## oaks renovation (Jun 16, 2007)

BamBamm5144 said:


> If I had the land paid off, would banks use that for collateral?


I don't think it's a matter of if you have the land paid off.
I'm pretty sure the land would have to be free and clear before the bank would lend you any money to even build. The bank wants to know the land is not going to be foreclosed on with their house sitting on it.


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## BamBamm5144 (Jul 12, 2008)

Thanks for all the help so far guys.

Seems like GCing the project is the way to go. I'll have a lot of research to do regarding the whole project but I look forward to it.


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## ohiohomedoctor (Dec 26, 2010)

Im looking at lots too. Seems like 25k is about as good as it gets here..


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## FRAME2FINISH (Aug 31, 2010)

I just bought a new mobile home on rented land old lady seen I was making a lot of money

So she found a lot that was a land contract well septic electric was done

She made the deal I got a variance to put my mobile home on the lot they asked how long so I said 10 years they said ok so we did the deal 3 acres a mile from town

Once we had the mobile set up I went to work and got the shell up and had one big ass shop

Then every week if I had a grand I'd buy a grands worth of material

Inside the shop I built all my vanitys trim kitchen etc 

I was almost done and one day I came home and the old lady had moved us in I didn't have to touch a thing

Made it harder to finish but all was good I eventually took out my shop and made her a nice living room then a couple years later built my garage

I had it paid for in three years now She wants to build out my kids basement and live there

Aslong as I can build a bigger shop I'm thinking about it


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## KnottyWoodwork (May 23, 2010)

I've done it a few times with pops. We started a separate LLC to become the Gc/builder. His personal home was a personal construction loan, and he hired the LLC to build it. When the CO was issued, he transferred the construction loan to a conventional mortgage. We also built a few through the LLC, and sold them through a realtor. Everything worked the same way, the company just carried the loans.

This was in the 2000-2005 range


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## EricBrancard (Jun 8, 2012)

ohiohomedoctor said:


> Im looking at lots too. Seems like 25k is about as good as it gets here..


Wow. I bought mine for $80K earlier this year and that was a steal. 

Just another example of why pricing questions are a no go here. Numbers vary so much from region to region.


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