Cheap home equity loans
What is so special about equity?
Equity is the determining factor in loans. It is the difference that makes a house your best financial tool instead of your worst financial burden. By building your own house, it will have over 50% of your equity in it. That’s a point that takes most homeowners around 20 years to reach.
That is why doing all the work yourself boosts you ahead of the other homeowners that hired a contractor or contractors. It puts you ahead by many years because one problem we have is to get through the “difficult years”. Usually, in our first years of starting a family, getting a house, and finding a career, we have a lot of difficulty making our paychecks stretch to meet all the demands. There never seems to be enough money.
That’s a common struggle in the lower and middle class families. Usually, by the time people have been working for about 20 years, things are going better. Their wages have increased, medical bills have been beaten down, and they can refinance their homes or take out a second mortgage for business ventures or to create a smaller mortgage payment. Equity in their property makes it easier for them to move around financially so they’re not so restricted by high payments.
One other thing, equity really is power. It helps out a lot more than you think. Here is my personal example of how equity helped my wife and I obtain our house. This is my own example and it might give some ideas to help your project get started. I should caution that I took a few chances by over extending myself by using credit cards to build my house. I thought I had a secure job to make the payments, but nothing is secure anymore I believe. My gamble worked out in the end, but it was really stressful!
I should have known something bad was on the way because we were actually starting our house and paying cash for everything. I kept thinking to myself, “We are having success and that has never happened to us before”. Sure enough, The North American Free Trade Agreement was passed. I never saw that one coming although I should have. The U.S. lifted tariffs on foreign products, and Canada flooded our markets with inexpensive forest products. That made the big company where I was working suddenly become uncompetitive and so several plants, not just ours, were shut down. In only just a few months the company stocks that I had planned to fall back on in difficult times dropped to about one-fifth the value because of an accounting scandal. Life can turn on you in a hurry. So, I had no job and very little money left to support us. I cashed in what stocks I had, bought metal for the roof, and had a well drilled. Then we sealed up the door and window openings with plastic and waited to see what was going to happen.
Eventually though, we was able to find a loan broker that got us a loan.
He found a construction loan that was offered from a private lender. I kind of felt like it was one of those shady deals at first, but it was actually a wealthy, elderly woman that had her sons managing her estate. The loan was for $28,000 at sixteen percent interest for six months. It sounded like high interest, but quite often construction loans are like that because they are always short term. Our house appraised for $71,000 in its unfinished state. I was so surprised that my labor was worth so much. I spent $28,000 and it was worth $71,000, not bad. The loan went through smoothly. The house was its own collateral. It took us only two months to finish. The total amount of interest paid on the construction loan was about $1300. It was a small price to pay for a loan of that type.
My wife had been doing kitchen shows for several months. She would take orders and the money for those orders, then deposit the money and write out a check to the kitchen products company when she placed the order. She only got commissions on twenty percent of everything she sold, but our checking account had several thousands of dollars going through it each month. It had the appearance of a good income. This type of loan is usually used for businesses that have unusual forms of income and profits. We consolidated the bills we had accumulated by building the house. The credit cards were paid and the nasty phone calls from creditors suddenly stopped.
We finished our house in the spring of 1997. The loan broker told us that the only reason we was able to get a loan was because the equity in our home was so high. I had no job, but I did have something of value, my house.
There are many people that do this and its big business to them. The one stipulation is if you are not a contractor and you don’t have journeyman’s licenses in plumbing, electrical, and other systems, you have to live in the house for a specified amount of time that varies from state to state before reselling.
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I just wanted to say that I love your website. My husband and I followed your instructions on building our own home. Most of the work we did ourselves, but not all. We saved $90,000 in labor costs and now have a beautiful home that we own.
--Sue and Les Carrigan, Draper, Utah
I built my own home doing all my own labor. My house costs me around $70,000 for materials. It took me 8 months to build and is about 2,000 square feet. I didn't think I could do it, but your house web site encouraged me. I used all the info you had.
Benny Luis Lopez,
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Little Rock, Arkansas
My wife and I lost our home to foreclosure but we kept a plot of land to start over. We are halfway through the construction of our house. Your website gave us hope to start over and build a house with low payments. We are in our late 60's but we find it rewarding to put so much effort into a project that will reward us for years to come.
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