Self contracted house build questions

[Tsavoie22]

Hey guys I’m bout to build my first barn house and we are wanting to do a lot ourselves. I’m wondering how do I get I self build construction loan. Bank wants me to get bids. I was hoping someone has been through this and has some good info. Only thing we planned on contracting was the barn the plumbing and electrical.


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[BrianL]

Hey guys I’m bout to build my first barn house and we are wanting to do a lot ourselves. I’m wondering how do I get I self build construction loan. Bank wants me to get bids. I was hoping someone has been through this and has some good info. Only thing we planned on contracting was the barn the plumbing and electrical.


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You are going to have to list someone, beside yourself, as contractor. I listed my uncle. They will have to sign at closing with the title company after completion stating all work is finished and all subs are paid.

You will need bids on everything, then you can decide to do what parts or hire it out. Get more than one bid, and submit the higher one. You want to have move available for the construction loan than you will need. If you come up short you will have to come out of pocket or spend few thousand to go thru another closing to increase loan amount.

[tigerscowboy]

You will need to provide the bank a complete cost estimate wherever you cannot provide a hard bid. Each step/stage, plus material and labor costs(if you don't do it). The bank needs supporting docs for the amount of money you want to borrow. They don't want to lend $500k for a $400k project.

Construction loans do require a lot of calculations and paperwork on the borrower's side.

I didn't involve a 3rd party. Only provided more information than the bank knew what to do with.

[Tsavoie22]

You are going to have to list someone, beside yourself, as contractor. I listed my uncle. They will have to sign at closing with the title company after completion stating all work is finished and all subs are paid.

You will need bids on everything, then you can decide to do what parts or hire it out. Get more than one bid, and submit the higher one. You want to have move available for the construction loan than you will need. If you come up short you will have to come out of pocket or spend few thousand to go thru another closing to increase loan amount.

Thanks for the advice that’s what I’m in process of doing


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[BrianL]

Thanks for the advice that’s what I’m in process of doing


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It is very easy to overlook pricing things, like door knobs, metal socket covers, plugs, Cat 6 wiring, so be careful and DO NOT underbid the project! Cost plus 20%

[Tsavoie22]

It is very easy to overlook pricing things, like door knobs, metal socket covers, plugs, Cat 6 wiring, so be careful and DO NOT underbid the project! Cost plus 20%

Thanks for info. That a what I was thinking add extra 20%


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[Tsavoie22]

You will need to provide the bank a complete cost estimate wherever you cannot provide a hard bid. Each step/stage, plus material and labor costs(if you don't do it). The bank needs supporting docs for the amount of money you want to borrow. They don't want to lend $500k for a $400k project.

Construction loans do require a lot of calculations and paperwork on the borrower's side.

I didn't involve a 3rd party. Only provided more information than the bank knew what to do with.

Thanks


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[sasqy]

Find a friend that is a contractor !
Have them sign for you as the main GC.
Just did mine last year, tried to find a loan but couldn’t without a contractor.
Banks too scared of homeowners taking the money and run.

[Low Fence]

Get bids…. Easier said than done. Most quality subs are not even talking with anyone but their main builders now. Market is crazy. The “owner gc” is so inefficient and drug out subs can’t loose money on them and once the first sub flakes…. It snowballs to the rest

Like mentioned take the high bids. Add 20%. Cause you ain’t gonna come in under… and extra money will cost you a kidney

[Gumbo Man]

Hopefully I’m not off track here but normally a construction loan is at a higher interest rate than it will be after rolling into a mortgage. So if your planning on building yourself if it takes a long time all the interest accrued will have to be paid at closing. I apologize if I’m wrong. Not trying to complicate your plan any more than it will already be.

[tigerscowboy]

Hopefully I’m not off track here but normally a construction loan is at a higher interest rate than it will be after rolling into a mortgage. So if your planning on building yourself if it takes a long time all the interest accrued will have to be paid at closing. I apologize if I’m wrong. Not trying to complicate your plan any more than it will already be.

Yes. Right now our construction loan rate is 6.5%

[junkmanhunter]

Hopefully I’m not off track here but normally a construction loan is at a higher interest rate than it will be after rolling into a mortgage. So if your planning on building yourself if it takes a long time all the interest accrued will have to be paid at closing. I apologize if I’m wrong. Not trying to complicate your plan any more than it will already be.

I am in the process of converting my Construction loan to a permanent mortgage now. I have to pay a monthly interest payment on the money I have actually drawn from bank.

I decided to keep my Construction loan rate 4% and not do a new loan. I don't think it will be worth my time and another round of closing cost to try and save 1%. That's just me.

OP, 20% is going to be too little, add 25-30%. With the way material prices are fluctuating right now, I think 20% is playing with fire. Remember, if you don't use it, it's no big deal, if you need it and don't have the funds available it is an issue. Just my opinion.

Good luck

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