Transcription: Colorado Springs Mortgage
Steve: This is stevecurrington.com and the Steven and Tyler show episode number 77.
Announcer: [Music] Welcome to the Stephen Tyler show with Stevecurring.com and Tyler Whyburn.
Steve: Who negotiated the contract for you?
Tyler: A realtor.
Steve: You’re pretty smart. Good for you man.
Announcer: They’re talking about everything you need to know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve and Tyler.
Steve: Yo. It’s Stevecurrington.com and the Steven and Tyler show and Tyler, Tyler. Tyler, are you awake? Wake up Tyler. This is another one of those episodes without Tyler. You guys, man I’ll tell you what, I think you’re getting half the podcast. I mean, one of our one of our guys just isn’t here that feels like half the podcast maybe, maybe not. Hey, today Colorado Springs mortgage loans is what we’re talking about. We’re talking about how much do I need for a construction loan? Like how much I’m going to have to borrow? The reason this is pertinent to know and a question that often people find out is because, typically when you’re building your own house and you’re doing a construction loan yourself Colorado Springs Mortgage on a custom-built house, the value of what the house is going to be worth when you’re done building it, should not be the same or exceed the amount that it cost to build it. Because, that wouldn’t be good. Would it?
It would not be good at all. Because then, you would build a house, it would take you like $250,000 to build your house and when it was done, and it was only worth you know to 250,000 or 210, that wouldn’t be good. You kind of be like stuck in the house with owing more on it than it was actually worth. And if you owed more than it’s actually worth, you won’t be able to get your permanent financing. Steve Currington, isn’t going to give you refinance to pay off your construction loan, for more than what your house is worth. [music] You got to be careful about that. You know I’m saying? At least I’m going to tell you what we call hard costs and soft costs.
Soft cost are like appraisals, title work, maybe you’ve got permits, taxes. Hard costs are going to be like hammers and nails, wood labor anything like that physically that you need. Here’s the thing, if you don’t control the hard costs of what it’s going to cost to build your house, you can go over budget. Okay? And you don’t want to go over budget because if you go over budget, you’re in that spot where you’ve built a house, you’ve spent too much money, its cost you too much to do it and now you owe more on your house than your house is actually worth.
You just want to make sure that you’re looking at the cost, whoever Colorado Springs Mortgage the general contractor is, if that’s you, if you’re the general contractor, then what you’re going to want to make sure is any of the subcontractors that you’re hiring, anybody that’s doing any work, that they’re doing it per the plans and specs and per the cost that you have budgeted for those things to happen. I think you can go online, anybody can goggle this. It’s probably not difficult to figure out. But, what the typical percentages of what it should cost me to build a house versus what it will be worth when you’re done.
Now, I would say you probably want somewhere between 10 and 15. Would be great if you had 20 or 30% equity in the property after you build it. But guys, that’s up to you. That’s really up to you and how you build it, and what you put in it, what your costs are and where you’re building it, and the land that it’s on, the square footage and all that stuff. You got to be really careful. You want to be and make sure that you’re educated person on building a house. There’s a lot of really smart degreed educated doctor, lawyer, nurses you name it. You don’t do home loans every day and you don’t do construction loans everyday. You don’t want to get yourself in a spot where you’ve built this house that isn’t worth what you built it for or what it cost you to build it.
I think that what your lender is going to do when you do the construction is, they’re going to do a contingency fund Colorado Springs Mortgage somewhere between 5 and 10% of your construction costs, to make sure there’s a little bit of caution for any overages, anything that happens. I had guy one time, he was overseeing the construction. He was being the general contractor. He walked in one day, and the guy that was framing the house put a wall on the wrong spot. Well guess what, guess who gets to pay for that?[laughs] Are you going to take it out of that subcontractors pay or you’re going to have to pay to fix it and unfortunately if you’re not with a reputable subcontractors, they might just walk off the job and say, “Sorry dude, that’s where I thought..” You get an argument with him. It’s just, that’s what it costs and you can’t get around it.
You just want to make sure that you build a buffer in there for some of those overages. I deal with it all the time. I talk to people all the time. They have said, “Oh man, we budgeted for all this and then my wife didn’t like that tile mate. She didn’t like the tile.” We had to go pick out this other tile. The other tile that we Colorado Springs Mortgage picked out is like two dollars more per square foot and our whole house is tile. Well how big is your house? “It’s 3,000 square feet.” Well it’s two dollars more per square foot and it’s 3,000 square feet, it doesn’t take a genius to figure out that that’s $6,000 difference. If you haven’t built that into your costs, or a buffer into the cost, then guess what, it’s going to come out your pockets. It’s what’s going to happen. Because you’re not going to be able to go back to your lender and say, “Oh I built the wall on the wrong place, oh, I wanted better tile, oh, I wanted this, I wanted that.”