Want To Save Even More Money Building Your Own Home?
If you’re going to build your own home and really want to save some money, consider doing some of the work yourself. There are several good reasons to do some work yourself, aside from saving money. The first and most important reason is you control the quality of the work. It’s important to remember “if you want the job done right, do it yourself.” The big assumption here of course is you know how to do it.
When I look at a sub-contractor doing his job I generally get the feeling that if he can do it then I can do it. Specialty tools and experience are on his side but when you stop and think about it, it’s not rocket science. I saved $6,000 on labor alone when I laid my own wood flooring. I just went to the internet and looked at “how-to” sites. I made certain the floor was level, laid some glue down and put wood on top of that, like I said it’s not rocket science.
The finished floor was every bit as beautiful as if a pro had done it and maybe better because I took the time to do it right. Of course I was on a fireman’s schedule and had the time to do some things on my own. Your situation may not allow time, but if it does, you’ll really appreciate your new home if you do some work yourself.
FREE Home Construction Interior Budgeting Spreadsheet
When budgeting for building your own home you should have a master budget for overall expenses, and a nice clean way to help you build a budget for your interior needs. This spreadsheet will allow you to plan each detail for each room down to the light switches. Although the fields are not populated for you, the math formulas are ready for you to insert each room’s needs accordingly. Enjoy!
If you are planning on building a home in the Greater San Antonio Area - Contact Me Before You Build.
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FREE Home Building Tax Benefits Spreadsheet
Build your own home and gain some great tax benefits in the process. Read the related article here.
If you are planning on building a home in the Greater San Antonio Area - Contact Me Before You Build.
Don’t forget, having the Master Plan Budgeting Worksheet is essential. Learn More Here.
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Loan to Value and Your Home Equity
Loan to Value (LTV)
When you decide to build your own home and need to borrow funds to accomplish the task, you will need to obtain an interim loan. This loan will provide funds to pay sub-contractors and buy materials. When you are done building, the interim loan is changed to a permanent loan.
To put it simply: Let’s say you want to build a home and estimate that it will cost you $250,000 to build it. You go to the bank to get money to build the home. The bank will send an appraiser to appraise the land, the houses in the neighborhood, and your plans. The appraiser will then file a report to the bank advising that when your house is finished being built, it should appraise at a certain amount. Let’s say he appraises your house at $300,000. The bank will now loan you 90% of the appraised value to build the house. This is called LTV or 90% Loan to Value which would be $270,000. In this case the bank would set aside in a special account your $270,000. You take money out of this account as you need it to pay for materials and sub-contractors. (more…)
What is Your Credit Score?
About Credit Scores
When you apply for credit - whether for a credit card, a car loan, or a mortgage - lenders want to know what risk they’d take by loaning money to you. Credit bureau scores are often called “FICO scores” because most credit bureau scores used in the U.S. are produced from software developed by Fair Isaac and Company. FICO scores are provided to lenders by the major credit reporting agencies.
You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Your three FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO scores can help you qualify for better rates from lenders.
FICO scores provide the best guide to future risk based solely on credit report data. The higher the credit score, the lower the risk. While many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders use to determine your actual interest rates.
The law requires the major nationwide consumer reporting companies — Experian, TransUnion, and Equifax — to give you a free copy of your credit report each year if you ask for it. Get your FREE Annual Credit Report or call 1-877-322-8228, a service created by these three companies, to obtain your free credit report each year.
Tax Benefits of Building Your Own Home
Tax Tip - Sales Tax Deduction
If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can’t claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. This information and more can be found here. Think of all you’ll have to buy and pay sales tax on for your new home!
Save every receipt from Home Depot, Lowes, building suppliers, etc. If your sub-contractor buys your wood for framing, make sure you get the receipt so you can deduct the tax. I was amazed at the amount of sales tax I paid while building my home and quite happy to add over $10,000 to my other deductions for the year. Just another reason to build your own home and another way for your family to keep more of their hard earned money.
If you are familiar with MS Excel, I provide a free template and instructional video that you may want to download and use to keep track of your sales taxes. At the end of the year it will come in handy. Happy building!!
Build Your Own Home & Increase Your Equity
Another Reason to Build Your Own Home
Another reason to build your own home is accelerated equity buildup. It stands to reason that if you pay less for the same house and it appraises for the same amount of money, your equity will be higher. Put in simple terms. You buy a home from a builder and he charges you $150,000 while it appraises at $175,000. When you walk in the front door, you have $25,000 in equity assuming you put nothing down on the property. Now build that same house on your own for $125,000. It still appraises the same so you have $50,000 in equity and you saved your family $25,000 in the process or you were able to put an extra $25,000 in upgrades you really wanted.
How to Get A Custom Home at A Not So Custom Price
Build Your Own Home
There are a number of reasons to consider building your own home not the least of which is saving money by building it at cost. I mean think about it. When you go with a custom home builder are you really getting the “custom” home that you want or are you being lead down the garden path? Consider this:
- Saves your family money by building at cost
- Do custom homebuilders really provide a “Custom Home”?
- Who actually controls you budget?
Take a good look at the proposal the custom home builder gives you. You will notice something called allowances. The cost of your “custom” home is based on these allowances. The builder has a budget which includes everything you get plus his profit. As long as you stay within his budget, you’ll get the home at the quoted price and he’ll make his profit. Anything above the allowed expenditures is added to your cost and of course there’s a little extra profit in there for the builder. For example; you may have $10,000 allowed for all your flooring. That $10,000 may buy carpeting, tile, etc. But what if you want wood flooring? Well, he can provide that for you but it will cost you an additional $5. a sq. ft. Your cost includes a 30 year composition roof. But what if you want a metal or tile roof? Again he can provide that for you but at an additional cost of $4,500 or more. (more…)
