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The following is an example of an actual custom dream home built in Chino Hills, CA.
This home was 4,400 square feet and was built on a 17,000 square foot lot.
This particular home was compared to buying a home in the same area of the same size.
You will notice a significant difference to building versus buying a home.
Building Versus Buying
|
Cost |
Building a Home |
Buying a Home |
|
Land |
$120,000.00 |
$670,000.00 |
|
Plans |
$8,500.00 |
Not Applicable |
|
Permits |
$24,000.00 |
Not Applicable |
|
Total Construction Costs |
$360,000.00 |
Not Applicable |
|
Permanent Closing Costs |
$9,849.00 |
$9,849.00 |
|
Construction Closing Costs |
$1,650.00 |
Not Applicable |
|
Interest During Construction |
$12,116.00 |
Not applicable |
|
Total Cost of the Project |
$536,115.00 |
$679,849.00 |
the $115 Home
Recall the price of buying this Chino Hills home was $670,000.00. Closing costs for that home were $9,849.00. The
sum of these figures is $679,849.00.
A 20% down payment for this home would be
$143,849.00.
You can be much better off if you were to build that same home. How?
If you were to subtract the instant equity of
$143,734.00 from the home you had built
from the 20% down payment noted above,
building the home could be done with
$115.00 cash in!
The Required Cash To Finance
The Bank lends 75% of the appraised
value in this particular project without income documentation.
Since the appraised value is $670,000.00,
Old Kent lent the applicant $502,500.00.
Remember that the total cost of the project is
$536,115.00. Subtracting the borrowed amount
from the total cost of the project means that
the applicant needed $33,615.00.
to finance this project without income documentation.
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