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12-18-2012 at 12:46 AM
dpraseutsi...
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dpraseutsinh is not online. Last active: 05-18-2013, 12:27 AMBronze

NBR: do you need good credit for building a house?

DH and i are living with his parents right now to save money to either buy a house or build one. the other day i found out our credit is not so hot. we would have to pay off a lot of things in order to buy a home. we've always wanted build a house, but we just thought it would take too long. do you need good credit to build your own house? money is not an issue as we both finally have good paying jobs now. we obviously plan on paying off our debts, but i am hoping to have a house soon as we CANNOT stand living at his parents' any longer. if you've built a house before.

 1. where do i start?

 2. how long does it usually take to build it?

 

THANK YALL SO MUCH! 


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12-18-2012 at 3:21 AM
jennygirlm...
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jennygirlmt is not online. Last active: 05-20-2013, 8:09 AMSilver
I've never built a house although i was there for the process twice when my parents built two of our homes. but unless you have the cash to put down then you obviously need a loan which obviously requires good credit. If you are living at home and have two good jobs you've got to be saving a good chunk of money. Start putting that towards your debt with the highest int rate and start whittling it down. Make multiple payments a month, which also can help improve your credit. I suggest you look into some debt program methods like Dave Ramsey, etc. though I think it's pretty straight forward. Make a budget although you should have one already, adhere to it, pay off the highest int debt first while making minimum payments on others, then moving on to the next, until you are debt free. Student loans aren't bad debt, so if you have them don't worry about those for now. We've never racked up credit cards, pay for cars in cash, paid off our student loans after one year if working, and only have our mortgage, which is a 15yr that we will pay sooner. Our credit is nearly perfect. It is quite a comfortable way to live. Especially since it gave me the opportunity to stay home fit a few years. It can easily be done and will set you up better financially to own a home. I used to hang out in the money board on the nest. It's a good place to learn about budgeting, debt payoff, etc. You'll be pleased to start out home ownership in a stable place and are quite lucky that you are in a situation to plow through your debt by living at home with good jobs! good luck!

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12-18-2012 at 6:35 AM
Kissty
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Kissty is online. Last active: 05-20-2013, 3:13 PMNewbie
Yes you do need good credit to build a home. I worked with a custom home builder at my last job. As the PP has stated you would need a good chunk of money to get started. Most times a mortgage is required to pay off the loan. Talk to a builder, they can give you some good information about getting your credit to a good place, and what to expect. It sounds like you may have some time so talk to several different builders. This also gives to time to select some one you're comfortable with. Hope this helps and Good Luck!

 
12-18-2012 at 8:19 AM
jobiann
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Iowa
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jobiann is not online. Last active: 05-20-2013, 1:46 PMGold
Yes, you need good credit and a decent amount of money saved up. Home building costs depend on your area too. Where I live it is fairly cheap to build, we've had a huge building boom while most of the country was in the housing crisis. And we still haven't seen any real negative side affects.


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12-18-2012 at 8:32 AM
SamiandEri...
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SamiandEric913 is not online. Last active: 02-24-2013, 7:17 PMNewbie

We just built our home this year. We started with a construction loan which, upon completion of the project, turned into a mortgage like any other. They did indeed run a credit check prior to starting, so as far as credit scores are concerned, you want a good one to buy OR build.

In addition, I'd recommend looking online at floor plans and exteriors, and bringing those plans to builders to see what they can do for you and for how much. As with anything, the more ornate you make your home (even in terms of hip roofs or extra peaks), the more $ it'll be.

Oh, timeline: broke ground late last October, moved in April 30. My husband did a lot of electrical/plumbing work himself though, so it probably wouldn't have taken as long if we'd used sub-contractors for everything. Hope that helps, and good luck!


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12-20-2012 at 2:13 PM
Organizedb...
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Organizedbride@yahoo.com is not online. Last active: 05-08-2013, 12:23 PMNewbie

You would start out with a construction loan, which they do run credit for. Depending on your score will show how much you are approved for, which determines how big of a house you can build, and it will also determine your interest rate. The good news is, people get approved to build and buy homes with average credit all the time and once your construction loan is ready to turn into your mortgage, you can have them run your credit again and it can lower your interest rate. So, while your house is being built about 6-8 months(USUALLY), you can try paying down some of your debt. 

Pay off your bigger balances with higher interest rates first. Also, if it is credit card debt..look into transferring balances to lower interest rate cards and paying them off in bulk. If you have medical bills and if you have the money saved you can sometimes get a discount if you pay them off in full. I just did that today with my hospital bill from baby. They gave me a 20% discount if I paid them off in full within 20 days.

Good luck, there are programs out there that you can look into as well. Depending on where you live and if it is rural or urban, there is a USDA rural development loan that you can get 100% financing through. You might check that out. 


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12-20-2012 at 2:18 PM
Organizedb...
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Organizedbride@yahoo.com is not online. Last active: 05-08-2013, 12:23 PMNewbie
Organizedbride@yahoo.com:

You would start out with a construction loan, which they do run credit for. Depending on your score will show how much you are approved for, which determines how big of a house you can build, and it will also determine your interest rate. The good news is, people get approved to build and buy homes with average credit all the time and once your construction loan is ready to turn into your mortgage, you can have them run your credit again and it can lower your interest rate. So, while your house is being built about 6-8 months(USUALLY), you can try paying down some of your debt. 

Pay off your bigger balances with higher interest rates first. Also, if it is credit card debt..look into transferring balances to lower interest rate cards and paying them off in bulk. If you have medical bills and if you have the money saved you can sometimes get a discount if you pay them off in full. I just did that today with my hospital bill from baby. They gave me a 20% discount if I paid them off in full within 20 days.

Good luck, there are programs out there that you can look into as well. Depending on where you live and if it is rural or urban, there is a USDA rural development loan that you can get 100% financing through. You might check that out. 

 

I also forgot to add that when dealing with construction/mortgage loans banks look at 2 main numbers. Your credit score and your debt-to-income ratio. Sometimes if you have a average credit score and a really low debt-to-income ratio, they will offset each other so I would check to see what your debt to income is. 


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