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Building & Remodeling costs
are the lowest they have been in 8 years! FINANCE
As an owner, financing the construction of your New House is one of your largest obstacles. Your conservative banks do not give you much leeway. Most banks want you to have your lot paid for and then the interest you have to pay is sometimes overwhelming. There are several different financing methods but you need to ask the right people to lead you first. Some of the lumberyards you can get financed by are ok but many of them have a 50 % rule which says you have to purchase 50% of the construction materials from them. In my opinion there are better ways to finance. One reason builders become so valuable is because the banks (if the builder is bank approved) will work with the builder on draws and in many cases lower interest rates. As I see it the underwriters view the builder/homeowner relationship in a more positive way. Let me say it to you this way. If the builder has built houses before it should be a lot easier for the builder to build than if a homeowner is building for the 1st time. Hence, the risk becomes less for the bank. Therefore homeowner's pay a higher percentage. Be very careful on your draw system. One of the problems you will encounter is the draws will not cover the actual work & materials which have been completed. There is a certain way to understand this and sometimes it is difficult for the lay person to figure it out. It is not much fun in getting 1/2 finished with your project and the draw system is short. Sure it might balance out by the end but what good does that do you when the project is 1/2 finished and your $30,000 short on the draw. Meaning you have to figure out a way to get the $30,000 before you can proceed. I can better explain this in person if you are local and have the desire to call me. I do have an 800 number so feel free to give me a call if you need up to date local information in the Michigan area. If you are having an extreme problem, my 800 209-9992 number works nationally. My cell phone is 313 670-7888.
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