Better to pay cash or get loan to build custom home?
My custom home blueprints are (finally!) completed and I'm interviewing the third builder prospect. I have bids in hand from the other two. The lot is paid for. I'm pre-approved for a construction loan (aka temp to perm financing or one time close). My plan had been to put the necessary 20% down and finance the balance. However, now I'm considering borrowing from my non retirement savings to pay for the house and will replenish with the proceeds from selling my current home after I move. I don't want to move twice otherwise I would sell sooner to get the cash out. The freedom of not having a mortgage and avoiding the 8-10K in loan approval/closing costs is appealing.
I have 2 questions: Have you been in a similar situation and what considerations tipped you one way or another? The 2nd is: What provisions need to be in the contract with the builder to pay him/her as the various stages of the building are completed? Is the money put in an escrow account to be drawn from and who/what conditions determines when that money is due? Do I need a building inspector to act on my behalf to protect my investment since there won't be a mortgage company/bank involved?