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Construction loan is the way to go. You can lump your land loan and construction loan together and convert them to a standard 30 year mortgage through some companies. Some down payment, but you only pay interest on the disbursements during the construction project and finally make payment on the mortgage when you're moved in. IndyMAC has a popular program.
http://constructioncenter.indymacbank.com/Consumers/B2C/default.asp?item=home
A friend of mine is building a house on 12 acres near Fredericksburg, VA. He has a wife and a 4 year old daughter. Works in DC (about an hour by train). He is acting as his own General Contractor. The lot was surveyed and tested (for septic) by the raw land developer. The developer also provided primitive roads to the site.
I work as an architect and helped my friend draw up his plans. Basically he took 2 plans from a book and mooshed them together.
He had a panel company fabricate the walls and roof trusses and had the whole house delivered to the site in semi trucks. He had hired framers to erect it.
He is looking at spending close to $300K ($75K for land/$225K for building). After all is said and done, he hopes it will appraise for close to $400K. He assumes he is saving close to 20-30% of TOTAL construction cost by acting as General Contractor.
By acting as GC, he is basically responsible for securing bids from subcontractors, signing contracts with the subs, and coordinating subcontractor activities. He's been real busy since they broke ground in April. I think he takes 1-2 days off per week ("working from home") to be on site.
He's been fighting with the excavator, the concrete guys, the framers, and the panel company. He likes fighting. The excavator overcharged him for silt fence. The concrete guys poured his foundation too high and left out some minor things (anchor bolts at the garage wall). The framers were found deficient in 12 areas and not up to industry standards in 24 more. The panel company shorted him a sliding glass door, a basement window, and delivered pine instead of oak stairs.
It is a lot of work and it helps greatly to have some friends who are experts to check things and call on for advice. It's also good to have some strong backs to call on as needed. I've been down there 3 times to help him carry heavy stuff.
Look into it and talk to some people who have done it in your area. Get the best subcontractors you can. Don't pay them final until you are COMPLETELY satisfied with their work.
Timberframes kick ass. Link - http://www.tfguild.org/
I hope to be doing the same in the very near future.
Best of luck,
Chris
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