Financing Your Home Building Dream: Build Your Home With Couch Change!

Have you considered the pay-as-you-go plan for funding the building of your home? Amazingly, I've periodically run across home-owner builders who have built their own homes as money became available.

Pocket change? Nuggets from under the couch cushions? Okay, that doesn't happen and I'm not really in favor of the pay-as-you-go construction of your home for a number of reasons. But it definitely has been and can be done.

The pay-as-you-go plan is just like it sounds. When enough money is saved, another aspect of the building process is completed. Usually, people considering this option have owned their land a while and have already paid for the improvements like well, sewer/septic systems, power to the lot, phones, etc. They are intent on not having a construction loan and not having any mortgage payments when the home is completed. A very nice goal indeed!

Unfortunately, few people are in the position to do this and fewer people can pull it off successfully. There are draw-backs to this way of building. If you can deal with the draw-backs, or even avoid them, you'll be doing OK. Consider these:

DRAWBACKS TO THE PAY-AS-YOU-GO PLAN

-- There is often a lack of a well defined plan for the entire cost and an accurate assessment of the time needed to complete construction. This leads to added delays over and above the waiting for funds.
-- Materials and exposed structure are subjected to weathering and decay if the project is left in unfinished condition too long.
-- Projects that appear to be abandoned for periods of time are subject to theft and vandalism.
-- Long and drawn out projects cause a loss of interest and enthusiasm and can be a strain on personal and family life.
-- Funding can be more difficult to get later if you need to apply for money to finish the project.
-- Building departments often frown on projects that go too long and sometimes charge penalties.
-- Neighbors can become disgruntled. I've even seen unfinished houses deliberately burnt to the ground!

A lot of thought should go into the decision to build this way. Despite the disadvantages, there are also some nice advantages and if you can pull it off in a reasonable amount of time, it surely can be successful.

IF YOU DECIDE TO USE THE PAY-AS-YOU-GO PLAN

If you decide this is for you. I hope you have experience building! There is a lot of knowledge about the building process that is needed. However, since there will not be a lender requiring you to demonstrate this you could be unaware of things you've omitted. And there is no outside influence creating the urgency for to test your knowledge and ability.

This is the main reason I'm not in favor of it for most people. People often just don't know what they don't know! To remedy this, you can hire someone as your consultant. Get a qualified person, usually a builder or construction superintendent to review all your plans and processes before you begin construction and agree to assist and inspect during construction. This should work well.

Great planning and awareness of the pitfalls can help you avoid them. Getting help will be like a new set of eyes that can spot things you've missed. Being certain to not let wood and other components get damaged by weather is important. If you are building with a partner, open and honest understanding of the time this will take is essential. And not having neighbors too close helps as well!

So, plan extremely well and make sure that your budget is sound and that your income is predictable. Don't plan on going more than 2 years (3 maximum). More time than this and the failure rates go way, way up.

For most, this simply is not a good option. So, for better options that include various ways to borrow money, please see other articles by Mel Inglima in this and other sites.