With all of the recent changes in the mortgage industry, it can be tough to keep up with the different requirements for the different loan programs available. Owner builder construction loans are probably as complex as residential mortgages can get. But, there are some simple rules about your credit scores that can make understanding the owner builder guidelines a little easier.

The first rule of thumb for an owner builder construction loan is that you will want to have a credit score of at least 620. Obviously, the higher your credit score is, the better it will be for your loan. However, if you want to be an owner builder to build your own home, then you will need to have a middle FICO credit score of at least 620.

Technically, for most owner builder loan programs, there is no strict minimum credit score requirement. In most cases, your loan application will be run through an automated approval system, which will analyze your overall risk factor. However, even without a strict minimum, you most likely are not going to get the approval through the computer system without at least a 620 score.

Along those same lines, an owner builder may not get approved for their financing even with a credit score above 620. In addition to analyzing your credit score, the approval system will also examine your current credit health. In other words, if you don’t have any current, healthy accounts that are at least one to two years old, then having a credit score above 620 probably won’t be enough to get your approval.

Likewise, owner builder construction loans are going to provide better rates in terms for borrowers with higher credit scores. Specifically, having a credit score above 700 will help you get the best rates and terms available.

It is important to remember, though, that a strong credit score will not assure an owner builder of getting approved. In other words, an owner builder with a strong credit score is not going to get through underwriting if he has too low of a documented income or too much debt. Furthermore, a strong credit score won’t be enough to get the loan approved if the project has a poor appraisal or an unrealistic budget. Therefore, a good credit score is just one piece of the puzzle for a strong owner builder file.

In fact, here are some of the specific advantages of having a higher credit score when applying for an owner builder construction loan:

1. An owner builder who has a high credit score can often get approved with less than the normal amount of savings in reserves.

2. If you have a credit score above 700, you will have a much smaller down payment requirement for an owner builder construction loan.

3. Also, an owner builder with high credit scores will get better interest rates as compared to someone with just average credit scores.

So, even though a having a credit score won’t get an owner builder approved if there are other glaring issues with the file, it will certainly provide the three advantages listed above.

Therefore, if you are considering being an owner builder, make sure you have a middle FICO score that is at least above 620. If your score is just barely over the 620 mark, then expect to have stricter down payment and interest rate requirements for your owner builder construction loan. So, if you have a limited amount of savings in the bank, you may want to work to get your credit scores above 700 before applying for an owner builder loan.

The loan process you follow when searching for a construction loan has some similarities to that of obtaining a regular mortgage. You will still be judged on your income, credit, savings and monthly debts just like a regular mortgage.

However, with a construction to permanent loan, there are a few additional factors that lenders consider. Since the home is not yet built, an “as-finished” or “as-completed” value must be established by a “plans and specs” appraisal.

When you go to get a mortgage on an existing house, you will also need an appraisal to establish the value and to insure that you are not paying more for the house than it is worth. With a home that is not yet built, this is doubly important. The lender needs to see what the projected home will be worth based on other homes that are similar in the immediate area.

Basically, for an appraisal prior to construction, you will deliver to your appraiser a set of home plans along with a list of materials you intend to use to finish the home, such as flooring, appliances, countertops, etc. Then, the appraiser will go to the vacant lot upon which you plan to build, and he will determine an appraised market value based on the recent sale of very similar homes in the immediate area.

In addition to the appraisal, the lender will also examine your proposed budget carefully to determine if there is enough money to build the home and if the builder (or owner-builder) is over-spending to build a home of that particular appraised value.

Each lender can have its own set of guidelines and parameters it uses to determine if you are under-budgeting or if you are over-budgeting. But, in general, the lender’s goal is to protect you and themselves from some potential disastrous scenarios: either an unfinished house or an over-built home in a market that won’t support the price.

Therefore, think of your construction loan as requiring two sets of approvals. First, you must be approved as a borrower. Second, the project you wish to build must be approved based on the appraisal and budget.

And, typically, the qualifying guidelines, especially for owner-builders, are more stringent than for regular purchase mortgages. This is for two very simple reasons: risk and supply/demand.

There are thousands of loan programs out there for buying a house. You can have good credit, bad credit, low income, high debt or any number of other variables and still qualify for a purchase mortgage.

But the choices are more limited when building a home. Construction loans (and owner-builder construction loans in particular) are more risky for lenders. This is why not all lenders offer them. And, it is why those who do offer them can set tougher qualifying standards and be more particular about who they give their money to.

Risk, along with supply and demand, determines all mortgage pricing.

Remember that construction loans in general, and owner-builder loans in particular, are more complex than typical purchase mortgages. They will require more time to prepare for on your part.

And, they will take longer for your lender to process and get you to closing than normal. So prepare appropriately. If you understand the process before starting, and set your expectations accordingly, you will have a much more pleasant loan experience.

In fact, when considering the timeline required to close on a construction loan, keep in mind that many times the lender is forced to wait on you, the borrower. Often, the slowest part of construction loan planning involves waiting on the blueprints and the budgeting.

The underwriting of the loan cannot really begin until the blueprints and budget are complete. So, the lender is often forced to wait for the borrower to complete these items. This is not a bad thing. It is just an important point to remember when planning for your overall construction loan timeline.

Speaking of planning for construction loans, here is one last important point that you may not have considered yet. As the mortgage market has drastically changed nationwide over the last couple of years, one of the new mortgage industry catchwords that you will likely hear is “area of declining value.” Chances are you will hear quite a bit about this for the next year or two.

What does it mean if you live in, or want to build in, an “area of declining value?” Simply put, it means that the government has declared that your local area has seen significant enough drops in average home values to place your area on a watch list.

Mortgage lenders have adopted different guidelines for doing business in these areas - and all lenders are slightly different.

Be prepared: if you find yourself in one of these areas, you will likely have a different set of qualifying standards than if you were not in a declining market area. This is not a reflection of you as a borrower, but in the general market conditions that currently exist.

Overall, if you are considering building your home and need construction financing, hopefully this brief article helped you recognize some of the key differences between the simpler purchase loans to which most people are accustomed and the more complex construction to permanent loan that will be required for building your home.

What are the key things to remember? First, understand that the construction to permanent loan is more complicated and may take a bit longer to complete. Second, be aware that there are basically two sets of approvals that are required: your credit approval as a borrower plus the approval of your project’s budget and appraisal. Finally, be on the lookout for areas of declining value, as it might affect your construction loan in some way or another.

If you are not aware of just who Sun Tzu was, then you may want to order The Art of War. It is an absolute must read for those in business.

More than 2,500 years ago, there was a period in China known as the Age of Warring States. This was an age of great conflict and uncertainty as seven warring states fought for survival & control of China.

For these states to win they sought out any means of gaining advantage over their opponents; those individuals with knowledge on strategy & leadership were extremely valuable and highly coveted.

During this period arose a general from the state of Ch’i known as Sun Tzu. His ability to win victories for his warlord gained him fame and power.

To hand down the wisdom he had gained from his years of battles Sun Tzu wrote a book, The Art of War, that became the classic work on strategy in China. His book, which details a complete philosophy on how to decisively defeat one’s opponent, has given guidance to military theorists and generals throughout the ages.

Military greats and business leaders alike have hailed The Art of War. Former U.S. Chairman of the Joint Chiefs of Staff Colin Powell said, I’ve read the Chinese classic The Art of War written by Sun Tzu. Sun Tzu has been studied for hundreds of years. He continues to give inspiration to soldiers and politicians. So every American soldier in the army knows of his works. We require our soldiers to read it.”

Today, Sun Tzu’s appeal has extended beyond the military realm into the world of business. IBM, XEROX, 3M, and many other corporate giants use the teachings of Sun Tzu in their training of executives because business by definition deals with competition.

So in looking at how Sun Tzu can be applied to short sales, let’s look at a few of his teachings and how they can be applied, and be applied successfully.

The Grand Duke said “one who is confused in purpose cannot respond to his enemy”.

This is the beginning of our journey in applying the teachings of Sun Tzu to our real estate business. Without purpose there can not be any victory. Without purpose there can be no success. Most importantly, being confused in purpose leaves you weak and unable to respond properly to the challenges of the real estate business.

For instance, if your goal is to successfully complete a short sale transaction, you have to define your purpose while simultaneously being able to respond to that of your enemy’s; in this case the foreclosing lender.

When we enter into a short sale transaction we define our purpose very clearly. Our objective is to obtain the highest possible discount on the payoff we are seeking and to sell the property by dual transaction immediately at closing to a buyer we have farmed. We also do not want to be involved in any transaction where we are not receiving at least 30% off of current market value and we expect a minimum of $20,000.00 profit per transaction.

This gives a very, clearly defined purpose and allows us to easily respond to our enemies, whether lender or real estate agent. Whatever response the lender gives us in reaction to our short sale proposal, we are not deterred in endeavoring to achieve OUR goal..OUR purpose.

Here are some other really valuable “Tzuisms” that we can apply to short sales.

“Knowledge that does not go beyond what the generals know is not good.”

This means that being successful is more than simply being on the same page. A short sale project is worthless if it’s not effectively communicated to everyone on our team (Seller, Buyer, hard money lender, agent, Title Company, attorney, office staff). As a project leader on a deal, or as an agent representing the project, one must make certain that all are informed, educated and prepared to orchestrate the transaction successfully.

How many real estate agents know how to manage a short sale correctly? Can you truly coordinate a short sale? Are you following the game plan as designed by the Buyer, or are you out there winging it, hoping it all works out? Calling a bank and asking if they accept short sales is transactional suicide. Sending every offer to the bank for approval is short sale suicide.

“If your troops do not equal his, temporarily avoid his initial onrush.”

Do not initially engage a competitor unless you are prepared. In regards to a short sale, don’t ever, ever speak to a bank regarding a short sale until you are prepared to do so. This means the only contact you are to have with a lender is to find out who the contact person is and what their contact information is. That’s it; you are not prepared at this point to negotiate. You are not educated, do not have all of the necessary information compiled, no package has been prepared and if you are just sending offers to the bank without preparing a full package to justify your requested discount then you will not likely succeed and be overrun by your opponent, the lender.

“If officers are unaccustomed to rigorous training they will be worried and hesitant in battle”

In his teachings, Sun Tzu often reiterates the importance of preparation. Proper training, proper education and battle tested experience are crucial. Of great significance is that Sun Tzu believed that training should be distinguished from education. While the latter employs a classroom setting, the former provides hands-on learning. In relation to short sales, you can see how to be a short sale expert; you need to have BOTH aspects. You need to have professional class room oriented educational instruction as well as successful hands-on experiential training. Absent both of these vital components you hardly are an expert. In addition, the value of real estate cross-training is integral to your short sale success.

You need to have knowledge of how things work in a short sale and how things impact a short sale. Issues like latent material defects, inspection problems, double closings, Hard Money lending, loss mitigation techniques, subject to transactions, obtaining deeds, foreclosure law, certain tax ramifications, and much more are parts of a short sale expert’s toolbox. What’s in yours?

“Therefore, when I have won a victory I do not repeat my tactics but respond to circumstances in an infinite variety of ways.”

Each deal is different. Sun Tzu recommends that you examine what you did right or wrong and changing your strategies accordingly. Peyton Manning is a MVP quarterback in the NFL, part of his pre-game preparation is watching every defensive play, from every single game, that his opponent has played that season. When we work our short sale deals we do the same. We review what our opponent is doing, and has done and what position they are currently in.

We look at what REO’s the bank has in inventory, we check their annual report and see what level of non-performing assets the bank has on their books, we sometimes buy a single share of stock so we can obtain various documents and the ability to attend shareholder meetings and conference calls, we see what the level of foreclosure activity they have in our immediate market; I could go on and on but suffice it to say, you need to know what changes you need to make in your presentation and approach and continually fine tune your game.

“The supreme importance in war is to attack the enemy’s strategy.”

The bank wants to make sure they get as much money back from the non-performing asset as they can. In mitigating their loss, their object and purpose is to minimize your profit. It is of the utmost importance that you attack their strategy as forcefully as possible. You have to be in a position of absolute dominance. You do not want to show up to a gun battle with a water pistol.

Our short sale package is over 150 pages once complete. Our template alone is 100 pages. We want our artillery to be armor piercing. We want to go for the jugular and not release until we win. It is of absolute importance to strike hard and attack the enemy’s strategy. If you are not prepared to use every weapon in your arsenal. If you are not educated and trained as to how to wage battle in a short sale setting, then you will succumb to the lender’s strategy.

By the way, you do know they have their own defined personal battle strategy? Don’t you? You do know they are practicing these exact precepts against you don’t you?

If not, you are underestimating your opponent and as Sun Tzu teaches, “He will win who, prepared himself, waits to take the enemy unprepared.”

The bank will own you if you do not know how to properly and expertly execute a short sale.

“To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting.”

Your goal, like ours has been, is to reach the point in your short sale business that you no longer need to fight. Become a proven opponent. Get to a point of credibility that once the lender acknowledges your presence, you can go straight to negotiation. No need to neither battle and prove your might nor demean your opponent. A mutual respect has been achieved through previous battle. Our capacity to wage battle and the manner in which we are prepared to do so is known and precedes us. Now, with many lenders, we can break their resistance to our numbers simply by being excellent in what we do. They know what kind of package to expect, they know what lengths we are willing to go. They know we are educated, trained and skilled opponents. We are respected warriors.

We train and educate others to be good soldiers and we’ll teach you as well.

Loans are designed to assist persons financially, and among the varied hard money loans is one. Hard money represents the effort and seriousness of the financial lending institutions to provide a helping hand in the instances of urgent monetary requirements. This particular loan plan can be opted as the last resort.

The Hard Money Loans can be interrupted in different manner, as the cost and exorbitant interest rates are being charged. The purposes that can be served with the help of this amount are such, when an individual intends to sale his/her venture or property with a little bit of renovation and repairment, then hard money loans are best suited. It is tailored for such services, and with the aid of it the borrower can earn a little bit and repay the loan without any stress.

Hard money loans have been providing services under different hallmarks like business loans, residential hard money loans etc. and bagged acclamation from the customers and financial experts. Approval of this loan consumes less time and also lenders in the market provide the loan in an easy way. But to avail the loan, applicants have to pledge property, any residential or commercial, as collateral for the loan. It is only based on the value of the collateral that lenders approve the amount. Having a higher equity, layers the path for the applicants to borrow more amount than mentioned. But bad credit score holders can also apply and borrow the funds to carry out their wants by furnishing the details of credit and personal status. The hard money loans are approved usually against affordable rate of interest.

Unlike the other loans, hard money loans can be approved within less time by filling the online application form. While applying, applicants should always try to avoid mistakes or else the approval process will get delayed. So, all your demands and buying or selling of new property will be made easy with the help of hard money loans.

Credit Repair, Now is the Time

Credit repair is more important than ever. Creditors have tightened their guidelines, effectively barring millions of Americans from borrowing money. Mortgage lenders, auto finance companies, and credit card issuers have all raised the bar. Borrowers with lower credit scores can expect to be denied, or to pay significantly higher interest rates than borrowers with good credit. If you have credit issues you cannot afford to ignore the potential benefits of credit repair.

Credit Report Errors are Common

To understand the potential of credit repair it is essential to grasp the extent of the inaccuracies built into the credit reporting system. Over three-quarters of all credit reports have errors. The three major credit bureaus would love you to believe that correcting these errors requires nothing more than a click of the button on their websites. This is far from the truth.

The Cost of Credit Reporting Errors

Wouldn’t it be great if credit reports were accurate? After all, your credit score may be the most important number in your life, and will certainly determine the interest rate you pay on your loans. Your interest rate will determine your payment, and a higher payment means a tighter budget. In short, credit reporting errors put a dent in the quality of your life and cannot be ignored.

Look Out For Yourself

A close read of the Fair Credit Reporting Act (FCRA), the legislation that governs the behavior of the credit bureaus reveals a disturbing reality. Although the FCRA requires the credit bureaus to comply with consumer credit repair disputes, it only requires compliance to the extent that corrective measures do not cause financial strain on the credit bureaus. In other words, accuracy is desired, but only in as much as a subjective measure of reasonableness allows.

The Professional Edge

Credit repair could easily become a budget-buster at the credit bureaus. It is in the best interest of the credit bureaus to perpetuate the damaging mythology that credit repair professionals can do nothing more for you than you can do for yourself. Customers of professional credit repair services have long known that credit repair involves far more than disputing obvious errors. A credit repair expert will typically identify twice the number of problems as an untrained consumer. This can mean a major difference in your credit scores.

Professional Credit Repair Qualifications

Professional credit repair involves in-depth knowledge of the FCRA, including reporting period limits, dispute procedures, and the specific obligations of the credit bureaus. A credit repair professional must also have a practical understanding of the FICO credit scoring model, an intimate grasp of the Fair Debt Collections Practices Act and individual state specific statutes of limitation for different debt types. Knowledge makes all of the difference in the results. And when it comes to your credit you cannot afford to settle for less.

Do it Yourself Credit Repair

If you are going to attempt credit repair on your own it is essential that you are well prepared before you begin the process. You should not take any action at all without a thorough grasp of everything involved. I have seen hundreds of people worsen their situation by jumping into the process without proper preparation. One of my favorite do-it-yourself books on credit repair starts with a firm warning that you should not take any credit repair action until you have read the entire book, cover to cover. The book is 500 pages long.

The Choice is Yours

We support the efforts of many do-it-yourselfers and are happy to answer credit repair questions from the DYI community. We have freely shared our knowledge for almost two decades; it is an important part of our philosophy. In the end the choice between hiring a credit repair professional and managing the process on your own depends on your inclination and schedule. If you have the time and energy the task can be rewarding. Our customers tend to be busy people that would rather focus their energies on other things and leave the credit repair to us.

Take the First Step Today!

If you have credit issues, please don’t delay the credit repair process. Some of the results will come quickly, but others will take time. You want to make sure that your credit scores are as good as they can possibly be when you need them. You do not want to be scrambling for a credit score boost at the last minute. Every point on your score counts, and every day in the credit repair process matters. Take the first step now. You will reach your goal before you know it. Good luck!

Copyright © 2008 James W. Kemish. All Content. All Rights Reserved.

I know with FHA loans they usually cover the down payment. How much percentage down payment do they do?

When you consolidate debt, it shows all old debts as being paid, etc, but the one new debt ratio, which is the amount being owed to the consolidation company will be huge. QUESTION: Does It lower the credit score to have a huge debt ratio like this?
OTHER QUESTION: and you also want to have say, 3 credit cards, (3 of them is the number you want to have a good credit profile, right), then the debt consolidation companies close your credit cards or do they not? How does it work

Foreclosure is of one of the most traumatic experiences a homeowner can face. The embarrassment of losing a home to foreclosure is compounded by the foreclosure’s devastating effects on your credit scores and ability to qualify for new credit. With an increase of 79% in foreclosure rates in 2007, increasing number of homeowners are facing the nightmare of losing their home. If you can no longer afford to make your mortgage payments, there are alternatives to foreclosure proceedings. One of the options receiving a lot of attention in the news is called a “short sale.”

What is a Short Sale?

A short sale is as an “agreement” between the homeowner and lender to allow a home to be sold for less than the amount that is owed on the mortgage. Short sales can be a helpful compromise for everyone involved. For a debt-ridden Seller, a short sale spares them some of the pain, embarrassment, and credit challenges that result from foreclosure. The lender avoids the work and expenses involved if they had to seize and auction off your property. The seller receives no money from the sale of the home but the lender does not report the transaction as a foreclosure to the credit bureau.

Selling a home through a short sale differs from selling a home under normal circumstances. While a buyer and seller may come to some sort of agreement on their own, the lender in a short sale will ultimately have final approval of any sales contract.

It’s important to note that the short sales occur at the sole discretion of your lender. Not all lenders will agree to short sales or discounted payoffs, especially if foreclosure presents them with a better opportunity to recoup their losses. Additionally, not all sellers and properties qualify for short sales. Usually, Borrowers must be at least 91 days delinquent before a lender will even discuss a short sale. There may be tax ramifications associated with any short payoff or foreclosure; therefore you should contact your tax advisor or lawyer before proceeding.

How Do I Proceed With A Short Sale?

Requirements vary from lender to lender, but most will demand that you prepare and submit a extensive array of documentation. This includes a written declaration (”hardship letter”) and supporting documentation proving an inability to make payments. You may be required to submit pay stubs, tax returns, and statements listing your assets.

This task can be made less daunting by employing the services of a loss mitigation specialist. These financial consultants have solid working relationships with mortgage lenders which allow them to help you avoid the common pitfalls you would encounter trying to negotiate with the lender yourself. Time is of the essence in finding the right alternative after defaulting on a loan. The average consumer might spend days making phone calls just to find the right department or person responsible for handling short sales for your lender. Figuring out the proper documentation to submit is both confusing and time consuming for consumers with little experience with the process.

A loss mitigation consultant will perform a thorough assessment of your personal finances and analyze your lender’s loss mitigation policies. They negotiate with your lender to find you the best possible solution to your home foreclosure problem. Their expert assistance with document preparation can present a much stronger case to convince the lender to agree to a short sale.

Loss mitigation consultants can also advise you about several additional alternatives to foreclosure besides short sales. Some homeowners situations are better served by Repayment Plans (Forbearance Agreement), Loan Modification/Refunding, or Deed-in-Lieu of Foreclosure.

Financial hardships are sometimes unavoidable. If you can no longer make payments on time, contact a loss mitigation consultant immediately to discuss your options. Alternatives to foreclosure exist and quick action on your part can save your credit score and leave you with less financial challenges in the future.

Owner Builder construction is a great way to build instant equity into your new home by eliminating the costs of a general contractor. In fact, cutting the overhead of a licensed general contractor can save an owner builder anywhere from ten to thirty percent on construction costs. That’s tens of thousands of dollars in instant equity for an owner builder.

However, owner builder construction loans are a tricky animal. Not only are the very difficult to find, but they can also be a lot more complicated than the typical purchase or refinance loan. Indeed, owner builder construction loans can be a lot more complicated than even a regular construction loan.

Therefore, if you are considering being an owner builder and managing the construction of your new home, then you need to make sure your owner builder financing has the following three features. These three owner builder construction loan features are imperative to the success of your project.

1. Owner Builder Loan Imperative One: A Line Item Budget with Unlimited Draws

Owner builders don’t sign a contract with a licensed general contractor to build their home for them. Instead, an owner builder must put together a detailed budget of the costs to build their new home.

If you are building your home with a licensed general contractor, the construction loan will typically have a fixed number of construction draws to fund the project. For example, the loan may have only five draws that are issued based on the percentage of completion of the home. Therefore, the builder will have to fund the construction until a draw can be taken.

For owner builders, though, this is usually not possible. Owner builders can’t fund construction out of pocket, relying on taking only five draws during the course of the project.

Instead, if you are going to be an owner builder, you are going to need the ability to take an unlimited number of draws during construction, based on the specific itemized budget that you put together during the planning phase.

With an owner-builder line item budget, you can take loan draws every step of the way. When you clear your land, you can take a draw. When dig the hole for your foundation, you can take a draw. This way, owner builders don’t have to carry the costs of construction out of their own pockets. Not having an itemized budget with unlimited draws is a recipe for disaster for owner builders.

2. Owner Builder Loan Imperative Two: The Owner Builder is in Control of the Draws

With typical construction loans, the general contractor will request the loan draws. Many times, the borrower will be required to sign for the draws in addition to the general contractor. However, even in this case, the general contractor has fifty percent of the control of the construction loan draws.

For owner builders, this is not an option. An owner builder needs to be in complete control of the loan draws. The sub-contractors should not be allowed to have any say over the draw process.

As long as the owner builder is the only person who can request the draws, without input from the sub-contractors, then there is no chance of the sub-contractors getting paid until the owner builder is fully satisfied with the work that they did.

If a sub-contractor gets paid prior to doing satisfactory work, the poor owner builder will never get his house built. Instead, you’ll be out of money before the roof is on.

Therefore, if you want to be an owner builder, ensure your construction loan is designed to keep you, and only you, in charge of the construction draw process. If you can do this, then you will never have to worry about giving money to one of your sub-contractors before they have finished the job.

3. Owner Builder Loan Imperative Three: Minimizing Your Loan Down Payment

Every construction project has cost over-runs. Sometimes, those extra costs won’t be fully covered by your construction loan. Therefore, it’s imperative that an owner builder has some cash set aside to be fully prepared for any small cost overages.

If your owner builder construction loan requires no down payment, or even a very small down payment, then you can keep as much cash as possible in your own pocket for the construction phase.

If you want to put the money into your construction loan to keep your monthly mortgage payments as low as possible and keep your equity as high as possible, then make sure your owner builder loan will allow you to pay down the balance at any point during construction.

Therefore, if you have no down payment, you can keep the money in your bank account to protect yourself from cost overages. And, when you are safely finishing your construction on budget, you can use that money to pay down the balance of your owner builder construction loan prior to converting over to your permanent mortgage. This way, you’ll be protected and have a smaller monthly mortgage payment.

Most construction loans require at least a ten percent down payment. In fact, many require a twenty percent down payment. However, if you can find an owner builder construction loan that will require little to no down payment, you will be well ahead of the game.

It’s possible for owner builders to minimize their down payments, because a good owner builder construction loan will cover up to 100% of their costs as long as there is a large spread between the cost to build and the finished value. (There should be a very large spread between the cost to build and the finished value if you are an owner builder, cutting out the overhead of a general contractor.)

Therefore, if you want to save tens of thousands of dollars by building your own home without hiring a general contractor, then you will need to find the right owner builder construction loan.

These loans can be difficult to find, and they are almost always a bit more complicated than a typical purchase loan. However, a good owner builder construction loan will always have these three essential features: a line item budget with unlimited draws, owner builder control over those draws, and a minimal down payment requirement.

I keep seeing in the news that foreclosure’s are up XX% in the last year. What they never say is what the foreclosure rate actually is. I mean if it’s up to 4% from 3%, that’s a dramatic 33% increase, but it also means that there are still 96% of people still paying their mortgages.

I just want to know what the real number is.