That is one of the areas, that I have been VERY fortunate. I financed my land, but not my house. So far, I have not had to borrow any money for the house. We are reaching the end of that. I will get Walls, and roof, windows and doors, and then I'm probably gonna be back at a bank, borrowing money to finish. It, shouldn't be too bad, and we should be able to get it paid off quickly, but you can't spend what you don't have on hand. And the faster we move in, the faster i stop paying rent. All of that can then go to paying off any loan on the house.
Hate to be the wet blanket, but I have BTDT, and the news may not be what you want to hear. Banks do not like to do construction loans to individual homeowners (non-contractors). That plus they want them wrapped up in like 6 months, and expect regular progress like a contractor working full time would be making. When we built I knew that was not going to work. I did find a local credit union that was very helpful but there were limits on what they could and would do. When we started, our previous home was owned free and clear. The best route at the time was to mortgage that (cash-out refi), use the proceeds for the new place and then pay it off when we sold it and moved in. The problem was that it was not enough even with our significant savings to complete. With what we had, I was able to get the house dried in, and a good deal of initial finish work done - drywall done and painted, flooring was in, finish electric was mostly done (enough to meet code), though i don't think we had siding on yet. At that point I went back to the credit union and asked them to write a mortgage on the new place. This was a big struggle. The loan officer tried lots of avenues to get the underwriters to approve. In the end it was for significantly less than I wanted, and was non-conforming (variable rate was required) but ended up to be enough to get us well past move-in and deep into finish work. Since that money eventually ran out, we have been able to keep going out of cash flow. That has worked, as finish work is very slow (especially as a second job after work) so it naturally gets spread out quite a bit.
Edit: I should note that this was an actual mortgage, which we still have and are paying off like any normal mortgage. It was not a construction loan. The big difficulty the bank had was writing a mortgage on an unfinished house. On the plus side, since they would not lend us as much as I wanted, we have less to pay off...
I have read stories of others that have had better luck. Probably all depends on the area, the banks/CU's and if you have a long relationship with them or not. Maybe you will get luckier than I did, but from the bulk of what I hear and read, my experience was more the norm (and maybe even better than norm).
So what I am really saying, is start sitting down with the finance folks
now. Explain what you are doing and be honest. Many will probably say flat out no, but some will work with you, I bet. Especially smaller local banks or CUs. If you already have a jump on this, then please ignore, but I know I got caught a bit off guard by how it turned out, so wanted to give you a heads-up.
Good luck
Dave
