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Buying a House in Cash vs. Home Loan

home loan

Living in a mortgage-free or loan-free home can be a blessing if you are the owner of the house and can sell, refurbish, and do a lot with the property. If you buy a home with the cash, you immediately own it, but if you buy the house on mortgage, you are liable to pay a certain amount annually or monthly. Buying a property in cash also means that at the end of the deal, you will be left with a low bank balance but a house of your own. Now, let us look at whether it is wise enough to buy a house in cash or home loan:

Buy a House in Cash

No Interest: Buying a house in cash means you do not have to pay any interest that would otherwise accrue from a home loan.

Quick Turnaround Time: As you pay in cash, you can expect the seal the deal as soon as possible. There is hardly a waiting time in cash payment.

You are Owner: Buying a property in cash makes you the immediate owner.

Keep Income Secret: You don’t have to disclose the income when buying an asset in cash. Mortgage lenders, however, require you to show a certain amount of income.

Reduced Liquidity: Paying in cash can you leave with the least money in the bank. Houses and assets can be way expensive to buy in cash.

Buy a House By Loan

Tax Benefits: Taxpayers in the US can subtract the interest paid on initial and following home loans up to $1,000,000 in mortgage arrears.

Qualify for a Mortgage: Prospective buyers are required to qualify for the loan. They will have to show income proof as well as their bank balance if needed for the mortgage lenders.

Time Consuming: Applying for a mortgage and buying a property on loan can be time-consuming. Lenders ask for a range of financial documents and scrutinize the application on various parameters. During the time of screening, the lenders may choose to turn down any form if it fails to meet the requirement.

Whether you are building a custom home or buying a spec home, you have a choice whether to buy by cash or through loan. Buying a home on loan is a wise choice if you have a stable income. Try to pay off the loan at the earliest and enjoy the ownership of the newly purchased property.

Home Building- A Guide

Building with a modular home beats out other approaches as well. Compared to most any pre-fab or factory assisted homebuilding approach, modular home building requires the least amount of on-site work. What this means is that managing the project is far easier than with these other approaches. More work is completed in the factory and you are not involved in managing that work. And that’s a good deal.

Manufactured (mobile) homes are in a different category (a type of vehicle) and thus are not considered “real” homes. That leaves modulars at the top of the list for ease of on-site construction.

Your Job as a Master Home Builder

You begin your building project, while your modular home is being constructed in the factory, by preparing the site for its arrival. Then you and your home building coach (if you hire one) will manage the rest of the process. Here’s what that will entail:

Preparing the land and foundation: Your foundation contractors must be advised that you’re building a modular home and that dimensions and levels must be perfect.

Well and septic systems: This job needs to be done regardless of the homebuilding approach you take. If these utilities are already to your site, it will be a simpler matter of hooking up to them.

Shipping to your building site: The manufacturer usually handles the details of arranging for shipment.

Assembly of the main modular sections: Your home will be delivered in huge sections or modules (typically 2 – 4). Heavy equipment, again arranged by the manufacturer, is used while placing and connecting the modules on the foundation.

Trade subcontractors: Needed to complete the plumbing, heating and air, and electrical systems once the sections are assembled. With the help and advice of the manufacturer/dealer, you will hire and manage local contractors for this work.

Finishing subcontractors: Finish carpenters, floor covering contractors, tile layers, and other finishing contractors will be needed to complete the home before it’s livable. You and your coach manage these subcontractors.

With modular homes, even much of the finishing work is provided by the manufacturer so on-site work will not utilize all that many contractors. This saves a whole lot of time and usually money as well.

Home Building – Services Offered

Primarily an Owner Builder or a Home Building Service offers building services to you to help you complete the construction of your new home by offering services that you may find difficult to organize or find on your own.

Many of these services provide a variety of the items in different packages that they charge you for. The charges can range from a flat fee per square foot to fees for plans and financing your project through a third party bank and a variety of service some of which I have listed below. They naturally make a profit on every item (or service) offered to you.

These Home Building services can include:

Canned (Pre-Drawn) House Plans that they provide as part of the overall package.

Custom House Plans or revisions to the plans that they provide. Sometimes the program will charge you extra or limit the number of revisions that you are allowed.

Assistance in financing your home building project. They usually offer these services through a third party bank that they act as mortgage brokers. The advantage they have over the individual seeking their own home building financing is the scale of the loans that they process can give you more leverage with the bank if you have credit challenges. They have a financial interest in making sure your loan goes through because they usually collect a nice commission for sending you to that particular bank. You will certainly pay, but this may be they way you get a loan.

A list of Qualified Home Building contractors from your area. Many of these services offer a list of contractors that you can employ to complete the different phases of construction of your new home. They may provide a list but offer no guarantee as to the effectiveness or qualifications of those contractors. In other words, when it comes to contractors, it’s between you and them. If there’s a problem you are on your own legally.

Literature and planning tools that can help you build your home. This could include a DIY manual for the first time homebuilder, financing literature etc…

Guidance for the First time Home Builder. This can include meeting with a qualified builder or building advisor to help you plan your project and lay out the process from start to finish.

Home Building – Things To Know

Home building things to knowHome building things to know are the very first information you should find out before you begin the construction of your dream home. It is essential for you to learn more about the entire process before your even break ground. Being well-informed and aware of the process and techniques about to be applied to your house is important because you will be living in that place. So you might as well know everything about it as the information can be handy in the future.

So if you have already hired a home builder to work with, you must let them know in advance that you want to keep updated about the progress or whatever information they need to give you – as in everything that will go on while building your house which includes:

  1. The entire house plan – You need to know where things are going, what to expect your home to look like, the floor plan, layout of design, and more.
  2. Materials used – This is where some home buyers get scammed – they expect something with higher quality as they are charged high but the builder cuts the cost so they’re using lower quality. It’s important to find out the materials used to build your home.
  3. Timeframe – Also find out how long the process takes. What’s the schedule going to be like? How long before you can finally move into your new home?
  4. Possible alterations – Even if the entire home building process was carefully and completely planned, some revisions may come along the way while building. So ask your builder to inform you if they will be changing anything.

So if you want to make sure that you’re getting high-quality home building service, hire licensed professionals to do the job. Do check out their portfolio too to see what they have worked on so far!