kate what will you do if the house costs more than the cash you have? having a small loan would allow you to finish the project without any delays (if you find out during the build that you need more money - you might have to stop or slow down the build while the loan is being processed.) Even if you got a bank loan, you wouldn't have to draw on the bank money until you needed it. And there might be a tax advantage to having a small mortgage - even if you really don't need one to finance the build - check with a tax accountant. I also like the idea of having some cash reserves on hand after you are done - cash is king. There are a lot of things you will want for your new home, and having cash to pay for it - rather than borrow it on a credit card - is a less costly way to go. Think about it - the bank money is relatively cheap money (say 5.75 to 7%) while credit cards charge 2 to 3 times that or more. If you have more than enough cash, and you don't want a mortgage, then you can forget the bank. You would eliminate all of the closing costs and fees which can be significant. Nothing wrong with this approach. If you do choose to borrow some money, the inspections that the bank does for approval of draw payments are not detailed and typically do not check quality. You can hire your own home inspector if you want an independent check on the quality of the work. If you self finance - then having your own home inspector is a must. best of luck with your project.

The GC will be required to build the garage if it is in the original loan documents that were bank approved. It would not be allowed to be built by a third party not under the control and supervision of the bank approved GC. If you or the Amish gentleman have a contractors license and insurance, the GC can certainly subcontract that portion to you, and you can build it. If the GC agrees to that. I would not plan on that happening. If the GC would take on the liability of hiring you as a laborer under his workman’s comp, then he could do so, and instruct you as an employee to build the garage. I would not plan on that happening either. Free liability is a hard no thanks. In all situations, it is the GC that will need to be paid by you via bank disbursements for building the garage, as that is the professional that the bank approved to be responsible for the build. The bank has not approved you to be involved as a co GC, or to work on their investment, or to hire whomever third part. All job responsibility goes through your GC. You are the funding conduit between the bank and the GC as the owner only. You don't ”recoup” cost overruns. Those are expenses that add to the COST of the build, but not the VALUE of the build result. They are spent and gone. Your savings account is permanently depleted until such time as you add to it again. If the bank agrees to reimburse you for the documented overruns, then you will just have to pay it out all over again when the specific loan amount runs out, and the project still needs that money to reach completion. If you do manage to cut build costs somewhere , that does nothing for your savings account. It does affect the loan amount. Cutting things also affects the value of the house, which will likely require a reappraisal and redo of the loan. That will require you to bring more cash to the table to cover the value shortfall. This is a shell game that only the bank wins. You always end up out the extra costs.

Good correction, 5iveminutes. Still, the gap between current value and the real construction cost would have me very worried were I the homeowner. The gap would be uninsurable. Robin, I was surprised at the lot cost, too: a very nice house on a bargain lot in an area of $400k-$450k houses? Hmmmm.... My personal experience with lot prices.... I just bought mine this year. It cost roughly the same as EJM's. It puts the "rough" in "diamond". It abuts an "affordable housing" subdivision in an area rated "rural". It has a cliff in the middle, 2 catchbasins for street runoff, berms, and a 3 foot wide underground storm drain cutting diagonally across the lot. I can't build anything on top of the drains or berms. Buildable square footage? About 800. No carport/garage. Around here, a lot with buildable space for a family-size $400k house would be 3x that much.

It is very hard to get funding for construction. I am an architect, in a not popular company in Florida. I always wanted something more but it is hard to get up in this domain without experience. I am getting a lot of orders and I need to make the best project to approve my building. I spend nights in a row just to make the layout of the building. I try to make my layout impressive so I always to it very big and tall. Sometimes I can use Mi tower hire just to finish it. The size of the layout can impress the investors and choose your project to become real.