My Greatest Concern Is...

"I have a growing interest in building my own home. My greatest concern is one of carrying cost during the construction process. Could you elaborate on possible pit falls and safety measures to protect one self during the construction process?"

In most construction loans the investor will let you have an initial draw of around 10% of the costs in the first stage of the draw so as to facilitate the start up. Some of them will even allow a 10% draw against "contingency reserve".

In some cases this advance may be deducted from the first draw.

There are a lot of construction loans which have been designed in the east cost. The draw schedules of these plans very rarely conform with the reality of life in places where most custom homes are being built on hillsides. In California for instance the costs involved in grading through foundation can be as high as 35% of total construction costs. Which is something that an east coast underwriter finds very difficult to understand.

It's a no frills simple web site in a question and Answer form that explains the entire process.

Now, since this post has kind of aged, and interest only mortgage loans have meanwhile become very popular I thought I'll use it to help my other site.

Interest only mortgage loans have always been around but with recent increase in real estate prices they have become more popular.

It is however important to be aware of interest only mortgage loan's shortcomings.