Hey bigbukhntr: You sound like you had an atypical experience with your home. I am considering doing the same thing, also here in N. Texas (Athens area at our lake home). I have a couple of questions for you or anyone else:
1) if you got a loan, did the lender require anything special since you were acting as your own g.c.?
2) did you have a background in construction or any other education that helped your situation?
My background is real estate, and I think I can handle it, but the lenders I have talked to have been a little skeptical on doing loans of this type.
If you are acting as your own GC for the first time, most banks are really nervous. There are too many people that think that they just have to sign contracts and checks.
Visit with the mortgage officers of several banks and find one that will be willing to work with you. A construction loan that rolls into a mortgage with liberal terms is the goal.
A plan that I have seen work is to have everything contracted subject to the bank loan. If you own the property and have all the subs' costs set in contracts, the banks know you mean business. It is always tough to GC for the first time and find a bank that believes you can do it. There is no mystery to building your own house by acting as GC but a bank does not want to own a half built home.
Your best bet is smaller banks that do not look to sell their mortgages. They are much more likely to work with you as a GC. The bigger banks have so many rules that you are just wasting your time.
With the interest rates the way they are, you may know an individual that is looking for a better return on their money. In the past I have worked out an agreement to borrow the funds to build on a private loan at a fair interest rate. The usual term is one year at which time the loan is converted to a private or bank mortgage. Just make sure that you give yourself enough cushion in the loan.
It is always beneficial to have a good basic knowledge of construction but not mandatory. If you feel that you need help, hire a retired building inspector or contractor to act as your advisor. In some cases it is money well spent. An hourly rate usually can be worked out. You will need to be at the site as often as possible to check on the construction. Before I was retired I would visit the site in the morning before going to my job and then again in the evening after the subs were gone. That is when I would measure and check all the work. Even the best subs make mistakes but they are quick to fix the problems.
Please remember to hire the best subs you can find even if their bid is higher. If it means putting your project off until they are available then do it. The key to a successful GC is his subs. Take the time to find the best and it will be like money in the bank. Every time I have tried to save a nickel by going with a questionable sub it has cost me more in money and aggravation.
The success of the project is all in the planning. Building the structure is the easy part.
Congratulations on a job well done. There is no better feeling than to move into your new home that you GCed. Sounds like you had good contracts and good subs. Those two factors always make a successful project.
cant help you with the loan part....we lived way under our means for a few years after we bought the property, and saved in order to pay cash for the house....but I did talk to a few mortgage companies before I started, and as long as I was willing to put the land up as collateral, they didn't seem to have a problem with financing the house....they just wanted too much in loan fees and orgination fees for my liking....so we just decided to pay as we go and use the bigbukhntr/mrsbigbukhntr savings and loan plan!....I did have a real good friend who works for a large builder helping me along, making sure everything was going o k , and I did hire a independent inspector to double check the subs work....the city inspector just seemed very inadequate and was more interested in just getting through the inspection than he was looking for code violations...he seemed to want to avoid any type of confrontation with any of the subs....thus the hiring of the independent inspection service....around 1200 bucks as I recall!...not cheap, but at least it gave me an independent opinion on certain matters....I also had a foundation engineer do my foundation plans and even had him check the piers as they were drilled qand filled, and had him come back out the day of the pour to be sure all the rebar/cables were in the right place...again, an added expense, but it gave me a good nights sleep knowing that he felt it was done correctly!...I have seen to many builders cut costs by letting things slide and not ever mentioning it to the owner!....
I found most of my subs by driving around the various new subdivisions being built in our area...I can probably tell every home that was built in the area in the last couple of years and who built it!....I looked at the subs work, and if it was good work, I talked to their boss and asked if they would be interested in doing my house for cash....I always kept a set of prints in my truck, and I asked them for a rough estimate and then I compared it to others I talked to.....I have a spiral notebook full of framers/roofers/bricklayers/drywall guys phone numbers....as I said, I spent probably 12-18 months gathering numbers of these guys....the builders do not pay these guys much, and they dragg their payment out for 30-45 days, so most of them jumped at the chance to do my house....I only lost one sub that I really wanted, the concrete guys...the week they were supposed to start my slab, they got hit with 14 new homes to pour for a new subdivision from their main builder...so I just drove around until I found some other concrete guys doing a house and used them instead...they were a little more per sq. ft, but they did a really good job according to the engineer....
yes, it was kinda scary at first, but just take your time realize that this isnt brain surgery, and you can do it if you do alittle research ...
<font color="blue"> mortgage companies... make their living by charging a commission. Most banks do not and you save 5% or more </font color>
Actually that's not necessarily the case any longer. Banks are using commissioned mortgage loan originators just like the mortgage companies and mortgage brokers do. Typically a mortgage broker earns the origination fee of 1% and half of that goes to the originator. From the other half the broker earns his income and pays his staff, etc.
Occasionally you'll find situations wherein either will try to make an extra eighth on the rate or pick up an extra fraction on discount points, etc., but that can backfire, too. Another way a mortgage broker can increase his income is to 'warehouse' the loan until he sees a favorable rate or discount point change. As with anything like this, though, it's a gamble pure and simple. He can get caught holding a loan that he can't sell without discounting it on the secondary market if the rate or points go the wrong direction on him.
I'm not sure how much, if any, of this is actually relative to the topic at hand, but I though some might find it interesting to learn how the process can work and why. [img]/forums/images/icons/smile.gif[/img]
Many the banks have started their own mortgage companies, and some do pay their loan officers based on a commission. Of the half dozen or so banks I deal with, two pay their loan officers a commission, (so about 1/3rd?) The remainder have salaried employees.
If you can get a 1% commission rate from a "Mom n Pop" mortgage broker, you are doing good. I deal with one that is that low and about a dozen others that sit around sniping and griping about the first one being too low.
Like anything thing else, you have to shop around for a loan and look at the total picture. Not just how much the payments are, but what is the total being paid back, all fees and charges included. Part of using credit responsibly is not paying more than necessary. There are unfortunately, people in the business who make their living out of charging the heck out of unwary people, and all the various fees associated with a mortgage is a good place to start.
Good points, Steve. I guess I should have said I was speaking of 'first tier' or 'A' credit lenders. Certainly some of the lower tier (B-C and especially D) lenders are notorious for outrageous charges, fees, origination and discount points. The second mortgage market is bad for this, too.
Well after a bunch of pricing of materals Im thinking I can do this house for about 18,000k.Going with 2x6 wall instead of 2x4s. Biggest shock was windows! Great Jumpin jarusaford ! From about 35 bucks ta all you got It seems. I want ta be able to heat this thing with wood and cool it with a window unit. Gonna be in the shade all summer and I will caulk and insulate everything carefully . Kinda proud of them wall ta wall rugs too aint they! Kinda scary when they go ta talking price per. sq. ft. !!!! Who baught up all the 8 dollar a yard stuff? With pad of course! Might have ta get a few more dogs for company ta reast their feet on In the winter! LOL!! Shoot, I cant wait ta start, I wont care If It takes me from now on to get It finished. At least ever stick will be paid in full or it wont be here.
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Good points, Steve. I guess I should have said I was speaking of 'first tier' or 'A' credit lenders. Certainly some of the lower tier (B-C and especially D) lenders are notorious for outrageous charges, fees, origination and discount points. The second mortgage market is bad for this, too.
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Unfortunately, the lower tier lenders are generally more aggressive in their marketing, and often people with perfectly good credit wind up paying lots of extra costs. If the borrower's credit is lousy, it is probably worth extra to get the loan. If the credit is good, it's a different story. Lots of predators out there, got to be careful. [img]/forums/images/icons/frown.gif[/img]
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