Building Your Own Home. What does it really take?

A lot of people absolutely love the idea of building their own home, but think that the task would just be outrageously difficult for them to achieve. A lot of people who build their own home do have some background in home construction, but there are also a lot of people who have zero experience in home building who get the job done and save thousands.

Building your own house doesn't necessarily mean picking up a hammer and going to work. A general contractor is basically a project manager or a site supervisor. You don't have to build your own home from the ground up with your own two hands. That doesn't mean that you can't, but for the people out there who want a new home exactly the way they want it, you need to hire the people to get the job done.

Just recently, I was speaking with Carl Heldmann, author of the best seller, Be Your Own House Contractor, and he mentioned a video he ran across that paints a great picture of what building your own home should be like. We chuckled at how the lady in the video was walking around the job site with white gloves on talking with sub contractors, but the truth is - that is what a general contractor does. General Contractors you know may not walk around the home site with white gloves on, but they are basically managing the project.

Here is a link to the video, Building Your Own Home Video

We all know that purchasing a home can be very stressful let alone building one, but I tell people all the time, once that loan closes and you get to work - that's where the real fun begins. By the end of the project you'll be a home building pro. That's not to say that there won't be challenges, you can expect them. But, the time you invest and the challenges you work through will pay off in the form of HUGE equity in your new home.

Owner Builder Financing - Construction Loans

If you've done your research, you'll find that it's becoming harder and harder to find lenders who will allow you to be an owner builder and act as your own GC. I talk to people every day who say they've been to their local bank only to get turned down for lack of a down payment. Some say they talked to a lender who would not allow them to be an owner builder and wanted them to use their preferred builder. The whole point in becoming an owner builder is to save thousands of dollars by not using a General Contractor. There is still hope.

Being in the mortgage, real estate, and construction industry for quite some time, I know where to look. I have local lenders state specific, nationwide lenders, and private investors for special projects. Owner builder financing is still possible through DIY Homes.

How to Build Your Own Home

Building your own home as an owner builder requires time and a good solid plan.

If you've been tossing around the idea of building your own home, then you've come to the right place. There is a lot to be considered when building your own home. First of all, do you have the time to manage the project? Second, are you able to get the financing or do you have the cash to make it happen either in your savings or from the equity in your current home?

First things first - Get Prequalified for financing
If you have cash to build your own home, this is not going to be a problem for you unless your budget is off and you run out of money before you complete your house. If don't have cash, you'll need financing, and the lenders who will entertain owner builder financing are few and far between. But, with a little research and a couple hours on the Internet you can find sites like this where DIY Homes offers construction to permanent loans.

So, what does it take to qualify? Well, the lender wants to see a good credit history with no bankruptcies in the past 2 years and some decent income and assets. If you don't have a good income or huge retirement accounts, that's not to say you can't get financing. Maybe you own your own land free and clear... Maybe you rent and you don't need to sell your current home. There are a lot of variables a lender takes into consideration when qualifying you for a construction loan. So, don't get discourage or put it off all together because you had a rough patch a few years back. You won't know unless you let a loan officer prequalify you.


Budgeting and Planning
Your budget is crucial to your entire project. This is where you solicit subcontractors to bid on various parts of your build; your drywall, foundation, framing, roofing, etc. Once you have bids from your subcontractors it's time to put it all together in a formal budget sheet, check it twice, then submit it for approval by the lender. If you own your land, you're ready to move on to the next step. If not, you'll need to find your dream lot that you want to put your dream home. Research the area to find out what similar lots with like home sizes are going for. This will give you a good idea as to what your appraisal might come in at. If you find the homes in the area are out of the loan limits that the lender gave you, it's time to scale down your plans or think about a smaller lot.

Choosing Subcontractors
Collecting of bids will be your most time consuming project up front. Putting a copy of your plans into subcontractors hands and getting a bid back could take some time. Make sure you choose subcontractors you know and trust. Just because they are the cheapest does not mean they are the best. Call on their references and research their current standings with the state licensing boards, department of corporations, and better business bureau.

So, You're Approved and Set to Close
Make sure you understand the lender guidelines and draw process. The money in your construction loan is not released all in one shot. You will make draw requests while building your home during specific phases in order to release funds and pay your subcontractors.

Start Building Your Own Home
Following a timeline and scheduling the building of your new home is crucial to becoming a successful owner builder. You'll need to know what needs to happen and when, so subcontractors are not tripping over one another and one is not waiting for another to finish. Keep records of conversations with everyone involved in building your home so if a problem arises, you have covered your back and have everything documented.

Building your own home can be very rewarding, but does take 30 minutes to an hour a day either on the phone or on the job site to make sure the job is getting done. It's definitely worth it though. When everything is said and done, you've built your own dream home, exactly how you want it, and where you want it. And, you hopefully have generated some instant equity from acting as your own General Contractor.