Owner Builder Loan

Written by Sierra Rein
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If you are looking for a successfully aggressive yet flexible way to build your own home, consider applying for an owner builder loan. By becoming an owner builder, you set yourself into a powerful and responsible position. You, not an outside general contractor, oversee the construction of your home, and can even get your hands dirty yourself.

An owner builder loan is based on the individual's credit in addition to the plans laid out for the future home. Bankers work with "debt ratios" to analyze how much of your personal income can be safely set aside each month for the eventual mortgage rate. This rate depends on the equity position already built into the final structure.

An Owner Builder Loan Gains Equity

Equity positions are created in one of two ways. The first way relies on out of pocket cash that comes directly from the family, or through a plot of owned land. The second way (and this is how being an owner builder helps) arrives from sweat equity accumulated through hard work done directly on the home themselves.

Through this loan process, a family can build their home instead of waiting to save up the money during this time. Instead, they only have to pay $1,000 in out of pocket expenses for preliminary blueprints and plans and concentrate on the building process. With their financial matters settled, they can look forward to move into their home the moment the paint dries.


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