I would like to build a new home yet pull a draw from the lender to support myself as I build it.
I will sell the new home for market value.
So I should make quite a bit on the sale yet I need to have money to live on while I do this.
Is this possible?
First question is? Are you planning on building the home yourself or having a builder do it???
Generally when obtaining a pre-construction loan, the builder will have to create a draw schedule which the bank will approve and follow. The builder has to summit reciepts and show proof of work to get there draws to continue building. Banks have to protect there assets from lousy builders. So it will be almost impossible to get the bank to give you money to live off while building a home. The bank is paying for the construction of the home not your living expenses while it is being built. Also you will have make payments during the building based on the draws (money released). Many times when going with a builder, they can add the estimated interest into the purchase price and loan so they will pay the interest payments during construction.
Pre-construction homes are a great thing in many markets and I am having many homes built now, but there are also many problems and things you need to be prepared for in pre-construction.
Did you know you need and insurance policy? Do you know who will be liable for all monies paid and rebuilding cost if the home is destoryed or damaged during construction? Who is paying the building insurance during construction and who will be liable for the deductible if something happens?? If someone gets hurt on the job, will you be sued?? Does the builder have enough workers comp insurance to protect you?? etc…many many questions