Why be an Owner Builder?
Initially, most consider the owner builder option for financial reasons. Eliminating the general contractor’s fee can save 20% to 35% of the cost of building a new home. This can mean a savings of $50,000 to $85,000 dollars on an average $250,000 dollar home. This savings translates into equity, the difference between what the home is worth vs. the total amount of the mortgage. In most cases this equity replaces the down payment; and often eliminates the PMI (private mortgage insurance) requirement. What does a 20% savings in the cost of your new house mean in real money? Example: using a home valued at $320,000 plus $7,000 in closing costs with a thirty year fixed rate loan at 6.5%. This illustration compares the same home built in the same area, one home built by a general contractor and sold at fair market value and the other home built by the owner at a twenty percent savings. Lower Monthly Payments: Contractor Owner Builder Percentage of Project Cost Financed: 100% 80% Total Const
