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How To Build A House: The Ultimate OWNER BUILDER Guide!

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    My name is Case Robinson, and I am 26
    old and I have successfully built 2 homes
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    As an owner-builder and right now I am
    planning my third home build.
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    I've created this video to be the most
    in-depth video on YouTube that will
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    actually teach you to build your own
    house.
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    I'm going to be covering everything from
    obtaining an owner-builder loan and
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    getting the financing you'll need to
    actually designing the house, to finding
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    and hiring, to sub-contractors and
    supplies that you'll need, to actually
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    building the house and actually managing
    the job site.
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    And, then all the way to the final blue
    tape walk-through and final inspection of
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    your completed home build.
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    If you are interested in building your
    house,
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    Then you should click the link down below
    and check out my digital course,
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    where I teach you everything you need to
    know to actually take on your first build.
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    As long as I provide ten PDFs and
    downloadable Excel sheets that will
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    assist you throughout your first home
    build.
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    So, with that said, let's get into the
    video.
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    So, the very first step in this building-
    your-own-house process is figuring out
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    what I like to refer to as the initial
    idea.
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    And, if you are watching this video, then
    you probably already have this initial
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    idea appear in your head, and that is
    likely one of the three options
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    that I am about to list.
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    Either you are thinking that you want to
    build a house to rent,
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    or you're thinking you want to build a
    house to sell,
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    or lastly, and probably the most popular,
    you're thinking you want to build
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    a house to occupy and live in then for
    your primary residence.
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    Building a house to rent can be building
    a single family property to keep as a
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    rental property, long-term real estate
    investment,
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    or secondly, you might be thinking of
    building a duplex or a triplex
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    or a fourplex or maybe even a small scale
    apartment complex,
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    or maybe even a big scale apartment
    complex to keep as a long-term
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    real estate investment property.
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    And then, lastly, building a house to
    occupy and live in for your primary
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    residence is obvious, you know, maybe
    you're thinking you want to build a
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    slightly larger house than what you live
    in right now with a pool.
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    That way, you can live there, you know,
    5 to 15 years and have your family
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    grow into that house.
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    Or maybe you're like "Hey, I have all the
    money in the world.
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    I have an unlimited budget and I'm ready
    to retire and build my, you know, custom
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    dream home on 200 acres and wherever
    that may be.
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    So, those are likely the three options for
    your initial idea, and that is the very
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    first step to the building-your-own-
    house process.
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    Just determining what that initial idea
    is.
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    Are you going to build a house to rent,
    to sell, or to live in as your primary
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    residence.
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    The second step to the building-your-own-
    house process is determining your
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    preliminary budget for the project, and
    this kind of depends on what financing
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    options you decide to go with on your home
    building.
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    And, for the most part, there are two main
    financing options.
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    The first one being cash in your own
    personal resources, and then the second
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    one would be a construction loan of
    some sort.
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    Cash in your own personal resources could
    be considered a number of things.
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    One, and most importantly
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    cash that you have in the bank
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    Whether that be a checking account or a
    savings account,
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    The second option may be a credit card of
    some sort, that you think you can
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    utilize on the home build.
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    Third option might be just like
    liquidating some stocks, or something
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    that you're investing into elsewhere.
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    Maybe you have a really good friend or
    family member who is willing
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    to give you money to go out and build
    your house.
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    Not that I know a friend that would
    give me
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    money to go build my own house but hey
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    cash and your own personal resources is
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    essentially whatever you have directly
    avaliable to you without getting
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    a construction loan. Right?
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    So, I actually built my first- two houses
    using cash and credit cards,
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    so, I've never got a construction loan but
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    as of right now I'm getting one for my
    next home build.
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    Determining your budget if you are
    building with cash, and your own
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    personal recources, is simply a matter
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    of calculating how much you have and then
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    calculating how much you're willing to
    take from that and invest into your
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    home build.
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    Whether that be you're building to rent,
    or sell, or keep as your primary residence
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    right so thats how you determine your
    preliminary budget, if you're going to
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    finance your home build with cash.
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    Now secondly, if you are considering to
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    build a house to rent, or to sell, and
    you're interested in getting a
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    construction loan, then you can
    probably pretty easily
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    obtain a commercial loan to build
    that house to rent or sell.
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    You will notice that building a house
    to rent or sell , both have in common
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    that you're building that project
    to make money, in attempt to
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    make money, and that's why
    commercial loans exist
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    So if you go in and meet with a commercial
    lendor they can give you commercial loans
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    not based on your income situation,
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    instead they evaluate the project itself,
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    and they evaluate the deal.
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    If you're building a fourplex, they
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    evaluate all the numbers, they crunch
    the numbers on the deal and they say
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    "This looks like a good investment, we
    will give you a commercial loan
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    to fund your deal"
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    Right? And so if you're looking to build
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    a house to rent or sell, then you can
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    probably pretty easily get a commercial
    loan but maybe we'll talk about that
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    in another video, because I'm sure most
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    of you people watching this video are
    interested in building your own house
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    to occupy and live in as your primary
    residence, and the most common type of
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    loan you will be able to get, especially
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    if you are considering building your own
    house, as your own general contractor,
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    as an owner-builder, will be what's
    called an 'owner-builder loan'
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    That is a construction to permenant loan,
    with a one time close.
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    There are three main qualifications when
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    it comes to an owner-builder loan, of
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    course these qualifications are going to
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    vary from lender to lender,
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    but with the lender that I'm working
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    with currently, I'm getting my
    owner-builder loan for the house that
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    I'm about to build, there are three main
    qualifications, and they are:
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    A minimum of a 675 credit score
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    Secondly, they approve 45% debt to income
    ratio
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    And then lastly, they require a
    15% down payment.
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    so, the first one being credit score
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    that's a really easy one to check,
    you've got to have a minumum of 675.
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    If you do not monitor your credit as of
    right now, I highly reccomend you do so
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    you know- what are you doing with your
    life if you're not checking your credit?
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    there are several free apps that you can
    download on your handy-dandy iphone,
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    or whatever phone you may have, and the
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    most popular ones are Experian and
    Credit Karma.
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    You can monitor your credit also through
    your banking app, I'm sure if you have
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    something like Chase Bank or CapitalOne.
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    Anyways, here's Credit Karma
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    Credit Karma shows my credit to be
    right there. 753 and 738 and then
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    on Experian, my credit score shows to be
    771.
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    Yeah my credit score is not the best,
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    because my credit takes an absolute
    beating
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    I applied for some kind of new credit,
    seems like every 2-3 months
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    I'm either buying a new truck, or applying
    for a new mortgage
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    or getting a new credit card or something
    because
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    credit is very important, and credit
    allows me to do the things that I'm doing.
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    So with that said,
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    that is the credit score qualification,
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    a minmum of 675 credit score, so the
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    second qualification that a bank is going
    to require you to have in order to get
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    approved to obtain an owner builder loan is
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    having enough money is the bank to pay the
    down payment for the loan.
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    Okay so, lets take a look at a couple easy
    to understand examples, so you can figure
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    out how the down payment is calculated and
    how it works.
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    Here we have a total project cost of
    250,000 dollars.
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    Fairly cheap project, and if you look we
    have two lines.
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    One goes to the down payment, which you
    are responsible for paying.
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    And then on the right we have the LTC,
    which stands for Loan To Cost.
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    So, this is going to be the loans amount.
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    You'll figure out, whenever you start
    exploring lenders and calling around
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    calling banks, calling different lenders.
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    You can ask them, what is the loans to
    cost amount that you guys allow.
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    Do you allow a 90% loan to cost, with a
    10% down payments?
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    Or do you offer a 80% loan to cost.
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    well then of course if you have a 80% loan
    to cost, then they would require a 20%
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    down payment.
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    Here in this example, well specifically
    with the bank that I'm working with,
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    as of right now, to get my owner builder
    loan, they require a 15% down payment.
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    So for these examples we're going to use a
    15% down payment.
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    So 15% of 250,000 dollars is a 37,500 down
    payment, and then they offer a 85%
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    loan to cost, which means they would lend
    me 212,500 dollars for this project.
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    Moving on.
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    Next project total project cost 500,000
    dollars.
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    With a 15% down payment, I would have to
    pay 75,000 dollar down payment
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    and then 85% loan to cost they would give
    a 425,000 dollar loan.
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    Moving on.
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    Total project cost, say I want to build a
    house, and the total project cost is going
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    to be 1,000,000 dollars.
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    They would require a 15% down payment,
    which is going to be 150,000 dollars
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    and then, boom, over here.
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    85% loan to cost, they would lend 850,000
    dollars.
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    And, im not going to go any higher then
    that because whenever a number starts
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    getting super high, there's sometimes some
    requirements and restrictions once loans
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    get above a certain amount.
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    So we'll stop there.
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    Hopefully that helps you understand how
    down payments work, and there is a down
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    payment requirement, so you are going to
    have enough money in the bank, to be able
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    to afford to make the down payment, on the
    loan.
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    And the last qualification that the bank
    is going to look at, to see if you are
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    approved, for an owner builder loan, has a
    little bit to do with what is called DTI
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    which stands for Debt To Income.
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    Debt to income ratio, specifically.
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    So, basically this is where the bank is
    going to evaluate your income situation
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    and they are going to evaluate your debt
    situation, and theyre going to do the math
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    to calculate the maximum monthly mortgage
    payment that you can afford, based on the
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    finished house that you want to build.
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    Right.
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    It does get a little bit confusing but I
    have it laid out into a very easy to
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    understand in real life example.
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    So, before I get into this real life
    example, just let me say that I'm not a
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    banker.
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    Im not a loan officer.
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    I'm not a licensed professional lender,
    you know whatever you want to call it.
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    Don't judge me on my terminology and
    whatever, but I'm going to explain it and
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    hopefully its fairly easy to understand.
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    Okay, so.
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    This is our real life example, where we
    have a, lets pretend its a single man who
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    lives alone.
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    And he wants to apply for a owner builder
    loan, and see if he can get approved.
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    Well this fella makes 240,000 dollars in
    annual income.
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    So, he makes 240,000 dollars a year,
    pretty good.
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    So this is equal to 20,000 dollars per
    month.
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    240,000 dollars per year, divided by 12
    gives you 20,000 dollars per month.
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    Next, is lenders approve you for up to 45%
    debt to income ratio.
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    Of course every lender is different.
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    Some lenders will only approve 40%, some
    will approve like 48%, and then others
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    are all kinda in-between.
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    But the lender that I'm working with will
    approve you for up to 45% debt to income
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    ratio.
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    So basically, what you do is you find out
    the amount that they will approve you up
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    to based on your debt to income.
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    And you multiply that percentage times
    your monthly income, so 45% times 20,000
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    is 9,000 dollars.
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    That is the maximum monthly payment that
    you can afford per month if you don't have
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    any other debt.
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    Well, lets say that this guy has 4,000
    dollars in monthly debt.
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    Whenever he submits his application and
    they pull his credit, they're going to see
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    that he owes credit card payments and a
    car payment, for a total of 4,000 dollars.
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    You know, we can pretend that this guy
    currently lives in a house that he owns.
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    But he's intends on selling that house
    once his house that he wants to build is
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    finished.
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    So the bank is not going to count that
    debt of the house he lives in for his
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    current mortgage payment.
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    So that's why wiped out.
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Title:
How To Build A House: The Ultimate OWNER BUILDER Guide!
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Video Language:
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Duration:
01:06:43

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