The complete tool box for financing the construction of a new home! Important financing tools will be provided. Knowledge for all levels of experience.

February Construction Class: Audio automatically transcribed by Sonix

February Construction Class Final.mp4: this mp4 audio file was with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Welcome to understanding the construction process by Black Diamond Mortgage. My name is David Boye and with Zach Falk here. Together, a Black Diamond Mortgage with the whole team, we represent about 60 years of mortgage and construction lending experience. And this class is intended to give you the toolbox of what you need to know to get ready to build a house. And a couple of things we wanted to go over today is some reasons why you would even enter the construction process, what you’re going to do first. But before we even get to that, I always like to in each class just point out how all lending gets done. And basically, it comes down to three things. Zach, you know what the three things are.

Speaker2:
I’m going to go with the three C’s. So the big ones are, you’ve got credit. Cash flow or income collateral or your appraised value of the property. So what Dave is illustrating is that any time we’re looking at a loan scenario, whether it be construction or existing builds, we’re always going to analyze those three and we have to be able to check each of those boxes so that we can proceed with financing.

Speaker1:
Yeah. So whatever you end up doing, the lender is going to make a decision based on the credit income and what the value of the property is. And that’ll help dictate some of the things that we talk about today. So as we look at all the different options, the options will be partly driven on where you land on the three C’s. You bet. Now, when we’re getting ready to talk about reasons why to build a house and step back real quick, I just want to point out, well, first I want to thank Freedom Bank for allowing us to use their bank to host this and thank Don Bennett. And then also point out that this is a traveling series of classes. This is our third one and we’re doing them approximately monthly and we will be doing in the next month or two. We’re going to be doing. First time homebuyer specific class coming up in a couple of weeks and that’s being headed up by Maria Phelps. And we’re also doing a class on networking as we enter the the active real estate season. Anybody that’s in real estate or other occupations related that just wants to hone in their networking skills. Basically, we’re going to provide the toolbox for networking so you can get sharpened up and ready to do business all year, and that’s going to be offered in the month of March.

Speaker2:
Something else I’ll offer to is that for those of you attending in person, we welcome questions. Of course, talked about that just a few minutes ago. For those online to put questions in, we do have somebody monitoring the live stream. So if you do have a question, please feel free to put it in. We prefer these classes to be interactive versus just a preaching session. So give be engage. That’d be great.

Speaker1:
All right. So Zach, you’re about to build a house. Interestingly enough, wire. Why did you decide you wanted to build a house?

Speaker2:
Yeah, it’s a good question. So construction as a result is near and dear to me. So I get a lot of phone calls on a daily basis where I’m talking with people who are interested in construction, so I get to speak to them out of a personal perspective, which is unique in that we can share some of the struggles together and also the good times. Construction was important for us because we’re blessed to have a plot of land that we can utilize. So there’s again hitting those three seeds. There’s one of those collateral components that made it a no brainer for us to go down the process. But the biggest thing is we are looking to build our quote forever home. So one of the beauties of new construction is that we get a lot of flexibility. We don’t have to buy something that someone else is designed. We get to be involved in that process. So that’s a huge reason for us. From a familial perspective, I have young kids and so having that dream home early, there’s an opportunity for us to build memories for our family. So those are the big reasons.

Speaker1:
So Zach has land with no home on it. If he tries to live there right now, he has to live in a camper or tent. Yeah, so he’s going to build a house. So that’s a reason to enter the construction arena because do you have six hundred thousand dollars build a house with right now?

Speaker2:
Sorry, but no.

Speaker1:
Ok, so he’s going to have to borrow that, hence the construction loan. So that’s one of the reasons you might end up in a construction loan. Another reason we’re seeing a lot of the market right now is you go look around and there’s no homes available to buy that you want. And so you start thinking about what if I built a house and that could land you in a construction scenario? What’s another one, Zach?

Speaker2:
Yeah, a couple of other things. Oftentimes, people believe that there’s an opportunity to save money if you build a house. We’ll kind of explore that a little bit more today. But when you have control over what’s happening, maybe you can choose your supply chain a little more carefully with the intent to try and save some money. So that’s another option we hear quite frequently.

Speaker1:
We also see people noticing that the houses that they could buy aren’t located where they want to live. Kind of getting back to no homes available. So there’s you can buy a house, but it’s not where you want it. There might be some land available where you want it, so you’re willing to take the risk to build. What’s another reason, Jack? Yeah, I

Speaker2:
Think well, for my scenario, I checked two of the boxes in that we want something a little more custom. So the new bill provides that opportunity. And maybe you do already have land and that’s a big component. So if you own land but you don’t own a home, it’s logical to go down the line of thinking, Well, let’s use the land that I currently have. How do you do that? You build.

Speaker1:
Great, so there’s a lot of reasons that you end up deciding not to buy an existing house and you enter this sphere of construction and then each one is going to own you toward a different process, potentially. So we’ll get into that a little bit, depending on how you ended up in the position of wanting to build. It might lead you to different options on how to build. And so we’ll go over all the different ways that you can use construction financing to build as we work through this class. If you do decide to build, what are some of the benefits of building your own homes, you kind of mentioned it, but maybe hone in on like what are the benefits of building a house?

Speaker2:
Yep, I think that there’s truthfully there’s a lot of flexibility. I was speaking with the gentleman the other day who has a personal mission to build a more environmentally focused home. You can’t really do that with an intense level of focus. If you’re buying a run of the Mill House, it’s already built. So he was he actually had $100000 budgeted strictly for windows. And so that’s an example of where you’re not a builder is not going to put one hundred thousand window package in a home that they build unless someone tells them to. So that’s definitely something that was beneficial for him was he could basically impart what he feels is important into his home building process. So that’s one of them.

Speaker1:
And then basically just I think you mentioned just having that ability to control the process of the final home is a benefit of building. You get to decide on a lot of things that aren’t already handed to you. And if you can handle the rest of it, it might be worth all the benefits, right?

Speaker2:
And one of the things that we’re going to talk about we really should start soon is that a lot of the things I’m talking about, the benefits of construction have to happen early. So you can’t necessarily go out on the construction building process and not have a plan. That’s one of the biggest things that we spend a lot of time with our clients when they make an initial contact is what’s the plan? Where are you going to start? Have you thought through what you need? And most of the time the answer is no, simply because there’s a lot of myths around perhaps the ease of construction, but we’re going to kind of dispel some of those. And the main thing to actually point out is that the better you plan initially. The more loan programs you will fit into and the better the process will go, and that’s one of our key points today is we have to plan way more than if you were to go find a realtor and purchase a house.

Speaker1:
I’m going to boldly quote the Bible, so if you don’t read it, don’t panic. There’s no sermon coming up, but from Luke Chapter 14 versus twenty eight to 30, it says for which of you desiring to build a tower does not first sit down and count the cost. Whether he has enough to complete it or otherwise, when he has laid the foundation is not able to finish. All who see it will mock him saying this guy or this man began to build and was not able to finish. Ouch. So the point is is that the planning is huge. So if you get nothing else out of this class, I’m going to give you the most important thing right now. So we are emailing out or you can download it or however you get it. If you’re here visiting in person, you’re being handed some of this. Basically, every project is going to come down to a couple of basic aspects of planning, and that’s going to be your budget, your specs and where everything is located and kind of the visual of the house. So we are providing you a spreadsheet that has every line item to build a house and you can go in there and do labor material and just work through it. There’s a site plan, a floor plan and elevation plan, just worksheet, just a piece graph paper with a little image of what those things are supposed to look like. It’s really important that you just sit down at the beginning of the project and do your best to get that on paper, and it’s probably going to be wrong the first time you do it.

Speaker1:
But you need to start doing it, and then you just need to keep honing in toward the accuracy because every bit of inaccuracy in that aspect of the budget and the specs and the drawings is going to ultimately it’s ultimately going to happen. And so if you’re on the low side, you’re going to have to spend more. And so the lender cares about this deeply because the lender doesn’t want that scripture that we just read. They do not want the half complete house and then we’re out of money and then you don’t want that either, because you don’t want to be in a half complete house. If you’re a guy and say to your wife, Well, we’re going to live in this house, it’s incomplete because all we did and the builder doesn’t want that because they’re trying to get paid. And if the money runs out, then all they can do is file lean on the house and they can’t give it. So everybody cares about this. And so some of the stuff you have to go through to get the construction loan is about everybody avoiding the problem of not completing the mission that we’re setting out to start. And there’s just a lot of details. So you start writing them down and then you start honing in for accuracy.

Speaker2:
And you mentioned three critical things. You talked about plans, specs, budget. So if I go to get a construction loan, whether it’s a one time close, a two time clause, which we’ll talk about those in a bit, do I need those things before the process begins on the lending side?

Speaker1:
Great question. So we get the call all the time and people don’t have that. So I guess the answer is no, but then it’s yes. So we have to start somewhere. So it’s it’s kind of like building this crazy piece of art and you start working on it and you got to start modifying it. So as soon as you sit down with the banker or the mortgage broker or everybody wants to know, well, what’s going to cost, you know, and maybe they want to do a cost per square foot or they want to. But bottom line is there’s a certain amount of money that you can afford to spend, and the house has to be able to be completed underneath that. And so if you are aiming some people, they’ll come in. And the first thing they’ll say is I’ve been out on the market and the houses are five hundred and eighty thousand and I really only want to spend four hundred and fifty thousand. Therefore, I want to build. Ok, now what’s the most important thing?

Speaker2:
Well, we got to figure out what the budget is.

Speaker1:
Can we build it for right now because otherwise it’s not a very good idea to build so. So yeah, basically you can sit down and determined, yep, you can afford a certain amount. Can we hit the target for that? A couple of missed items that tend. That’s why it’s good to look at these worksheets that we’ve handed out or just things that you might not think about. Sometimes people think about the house, but they don’t think about the road and the well and the septic. Those things could to be 20 percent of the price of the whole project. So get all those things where that you can see them so that you don’t miss things.

Speaker2:
Yep, absolutely. And using personal example. So we have this a lot of land, which is undeveloped. So when we first started the process of thinking through construction,

Speaker1:
Does it on your house, on our house?

Speaker2:
Yeah, that’s where my mind went was. All right. Let’s get a budget for the house and let’s start and the built my builder said, Well, how are we going to bring material to where you want to put the home on the lot? And there’s a simple, very simple question that makes you think, Oh yeah, we probably need some sort of road to get back to the house. Right. And so and it’s those little things. I’m like, Oh my goodness, I have all this cost that I didn’t necessarily plan for. And so ideally, you guys benefit from learning from some of my failed experiences, perhaps that we’re turning around into successes. But yeah, you have to think of those site things first and then that led to septic. And then it led to, well, what are you going to do for water? Oh, I’ve got to drill well. What about electric, you know? And so all these questions come up that are really critical to think about early so that you’re appropriately budgeting because you don’t, you know, you don’t want to have an additional one hundred thousand dollars that you don’t know where it’s coming from. That’s a dangerous thing. Nobody wants that.

Speaker1:
And that’s important. So on the little packet we sent out, there’s a little site plan on there and there’s a place where you think you’re going to put the house on the lot. And the cost of putting the house right there depends on if it fulfills all these other needs. So you want to get the house drawn on there and then you want to go out, walk on the property and be like, Can I actually put it right there? Or is there a rock in the way or is there? The well has to be one hundred feet from the septic, you know all these. So you get those things out. So then you go, OK, now we’re moving down the right course. We were actually setting up to do this video that we’re doing for you right now. And all of a sudden, we wished that we had set one thing up in a different location because we ran out of extension cord. And so we had to like rearrange the entire setup so we can get the American flag perfectly located right behind us. But that’s because we didn’t do the site plan first and we set up the camera. So it’s important.

Speaker1:
So get back to a few things we were talking about the benefits you get to do the custom home, you get to do it your way benefits. What are the features that kind of go behind that and make it whether all of a sudden it becomes it’s not a good idea anymore because the features start to change, whether it’s a benefit or not. So one of the things about construction is whether you can do it or not is like, basically, is the cost going to be what you think, you know, so you start honing in on that. And so as you write down everything you’re going to determine, like in your case, I think I remember when you were talking to your builder after you determine what a house was going to cost to build, then you started putting the things in because you went and talked to the construction lender and the builder and you’re like, We’re going to have to add another one hundred and fifty dollars into this because this property needs stuff. So now your budget’s changed. So one of the features is getting all the costs listed so that, you know, where is the final number?

Speaker2:
Yeah, I think another feature of a construction loan is it does require that collateral that we talked about. So a couple of things within the process is that you will need whether you do a construction loan, which is an option where you go to a banker and they actually allow you to take draws or whether you do a one time closed construction loan where you actually begin. The process with a mortgage is basically kind of the way to think about it. You’re going to need to look at those three C’s that we talked about, and one of those is collateral. So on a construction loan, what do you do for a down payment? Can you do a zero down construction loan? Well, depends on what your objectives are. But the reality is, is that oftentimes you have to have that discussion with your mortgage broker, with your banker, who you trust as an expert. And that kind of gets us into a couple of the different types. Perhaps we’ll hit in a moment, but that feature is what’s your down payment? Are you going to collateralize land, meaning using the value of that land as a way to demonstrate to the bank that we’re good for the money you can loan it to us? Or is that going to come out of pocket? And that budget spreadsheet is really important because it will actually end up in that discussion at the bottom right corner of that spreadsheet. You do all the costs, you figure it out and then you have to determine, Well, where’s the money going to come from? To get to that 20 percent down if you were doing a two time close construction project?

Speaker1:
Well, let’s address that right now. So can you do a low down payment construction loan? Yes, that’s right. The answer is yes. So one of the things to think about is any loan that can be a mortgage, such as a zero down rural development loan that’s offered in the state of Montana. An FHA loan of three and a half percent down some of the products that are geared towards first time homebuyers. You can do a construction loan with that product, meaning you don’t have to put any more money down than you would if you went out and bought a house with this low down option. So that’s a benefit. Some of the features of that product and where it gets a little more challenging is there is very little room for error on the zero down or the three and a half percent down or the three percent down low because the margin for error is that little bit of down payment or no down payment. So what does the lender have to do to compensate? Basically, they can’t. There can be no mistakes in the budget. So when you’re doing the budget, if you have flexibility in down payment, the lender might give you a little more flexibility. And when you need to have all your decisions made, you might be able to just have like a flooring budget of eight thousand bucks. That’s unspecified what it is and the bank might be like. That’s fine. That’s a reasonable number. Not on a zero down. We need to know what kind of Florida is, and you know, can it be installed for that? Is there a contractor that can do the work because there’s no there’s nowhere to go get more money in that scenario? So the the big thing to ask yourself is if you’re going to go low down payment construction, you’ll need a little bit more fortitude to endure the upfront planning required because all the upfront planning must be done. Yeah.

Speaker2:
And I think there are benefits to that too, is that if you’re like me and you’ve got cash in your pocket and you’re going to the grocery store, that cash might find a way out of your pocket. So one of the things that’s nice about those lower down payment programs, they do confine you. And so that actually will help protect you from overrun on your budget, which is actually really important for a lot of folks, especially if you’ve gone through.

Speaker1:
Sorry, did you say overrun? Can these things go over?

Speaker2:
Yes. Ok. They came out of this, yes. But so they help confine you a little bit. And when you are talking to, you’re going through the initial application again, hitting those three CS, you might have a maximum budget. And if you go over that budget, the loan approval might evaporate. And so that’s where that one time closed can be very beneficial to help you make those decisions up front, which does require some work, but it does help protect you from spending more than you either want to or can.

Speaker1:
Now one thing you’ll see on all the construction loans, whether it’s a low down or even if you get one where you’re making a lot of down payment and you’re getting a more flexible loan through like a local lending institution is, they’re going to want a contingency anyway. What’s the contingency, Jack and why is it important?

Speaker2:
You bet contingency is designed to protect you and the lender. Basically, what it means is if you set a budget for five hundred thousand dollars, there’s likely going to be some sort of contingency that says, well, everyone knows that construction costs money and sometimes more than you initially planned for it. So that contingency is built in to say, let’s say it’s 10 percent contingency in that example. So there’s what is that fifty thousand dollars available to you should you reach that overrun scenario? So that’s what that contingency is.

Speaker1:
And if you’re building a house within the last year, this probably would have happened to you. So you would have everybody would have agreed to all the numbers. Everybody meant it. Nobody was taking unnecessary risk. But all of a sudden the project is now commenced and you’re in a zero down loan. There’s no room for error, and the refrigerator coming from across seas is held up and we need to buy a more expensive refrigerator. And where are we going to get the money they go? Get it out of the contingency. So the good news is is prudent. Lending is always going to be to have, you know, a contingency amount. And the good news is if you stay under budget, you don’t borrow that, but you have to be prepared to borrow it. So to give you a quick example, in Zack’s scenario, he just laid out where he spent five hundred and we might build a loan zero down at five hundred and fifty thousand and not intend to borrow that last fifty. But we’re going to have it in there because if we need it, we need to go get it and it’s got to be for something that nobody expected. So it’s one of these things where it came up in the middle of the project and we all agree that it was unexpected needs to be paid for anyway because we’ve got to get the house done contingency. So on on the lower down, there are more important, but on all the projects we’re going to want, the lender is going to want to see it because nobody wants to end up with the half complete house. So there’s going to have to be a line item on your budget that says, What if we don’t hit the target? Where are we going to get the money and it’s actually a line item on your budget?

Speaker2:
But Dave, you talked about a couple of types. We’ve got an off road construction loan. There’s FHA construction loan, a conventional one time or two time closed construction loan. So first thing you illustrate is there’s a lot of. So one of the things that’s kind of a myth is that you have one choice when it comes to construction and you’ve got to have 20 percent down, well, maybe you don’t. So that’s where we encourage people to make that initial phone call. Understand what your options are. That’s important. But what if I’m a veteran? What if I’ve served the United States military? What happens?

Speaker1:
Then you get a great zero down option for construction bingo? Yeah. If you if you’re eligible for any mortgage, you can use it for construction. So essentially what the lender is doing if they’re offering, say, a zero down VA loan for construction or one of these products is they just need to build it, build the whole project so that it fits underneath that loan so that once we start, we already know that we can finish. And so just a lot of upfront planning and preparation will get you one of those products. And like you said, they can be good with the extra planning. But there’s more planning. The more the less you put down, the more planning will be required to get the mortgage for your protection, the builders and the lenders. One of the things that was a feature that I wanted to point out was length of construction, length of time. So just to give you a little visualization on on like the general scenario, the you’re going to be in a term of construction that’s going to be somewhere between six, nine or 12 months and you’re going to kind of elect that option with the builder when you’re planning out your project. So and that drives cost a little bit because the longer it takes, the more it costs a little bit because you’re you just have more uncertainty and more time. The interest rate available to you in the future has got to be leveraged out for a year instead of six months. So every little detail, the tighter you can go, the better off you are. But in reality, sometimes it takes longer than expected or just you want to build it at six. But after meeting with the builder and everybody and in Montana, you might have three months where you can’t do anything.

Speaker1:
Today, it’s minus 17 degrees here, and it was this morning and clubby fall. So probably nobody wants to work today outside. So you might just have to wait and it might make your construction term last longer. So initial phase, you’re going to pick that length of time, and that’s going to drive all the little details, like what is my rate going to be when this is all done? Well, if it’s farther out in the future, it’s a little bit more uncertain than if. It’s like coming up in the next six months, we can make a better projection and so we can set you up with a more tighter, tighter time frame on those kind of details that. Um, do you wanna unpack the process a little bit? Let’s do it. So so let’s say that we’ve um, we’ve. So what we encourage you to do, I mean, black diamond, we get a call all the time says, Hey, how does building work? You know, this class is basically designed to do a couple of things. One is just to give you a toolkit. And so the toolkit is all those little documents we just sent out, which is the specs and the budget. And and so like, get you thinking about the toolkit. Like, how is this thing going to get put together? And then you’re like, OK, I’m I’ve made I’ve looked at all that. I’ve sat down with my significant other and we’ve kind of hashed some numbers out on the kitchen table and we would like to proceed with one of the options. So, yeah, what does the process look like after that?

Speaker2:
Yeah. So there’s a couple of process flows in your package if you guys want to reference those while we go through this. I don’t want to spend a whole lot of time on it, but it just gives you a good idea of what we’ll need. So the first one is that contractor approval process or your builder approval. That is important. You can’t necessarily have your father in law or your close friend build your house

Speaker1:
Unless he’s really good at it.

Speaker2:
Right. But it’s not, uh, it’s not doable unless it’s vetted out. We’ll put it that way. So the contractor approval process does that. It looks at the builder. One of the things that the lender will do is actually call references of that builder, so they want to make sure that the builder is reputable. They’ve got a good reputation. It helps them understand that if they get a budget from the builder that it’s there’s a good chance that it’s reality, since that’s what they’re basing the lending off of. So that’s really important. So when we get a phone call, I talk about the build approval with the client who calls, and we will oftentimes send out an additional packet beyond what you’re seeing here that actually gets into the details of what’s required. So there’s there’s a form for your contractor to fill out and they list those references. They say types of jobs that they’ve done, that’s a little bit more in depth than what we’re doing this morning. But if we do get phone calls, we like to produce that and say, Hey, here’s this packet. Read through it on the on an additional detail level. That’s when we’re kind of getting serious about actually starting the project and they’re going to actually go through and we have to come through that process with an approved builder.

Speaker2:
So that’s important. I remember that the next one is the project approval. That’s where you’re getting the initial documentation from the contractor. So that’s going to include your budget and your specs. And then one of the things that’s important in there on the specs side of things is there’s probably a designer that gets built in here at some point. Oftentimes, builders maybe have their own designer that they use in-house, or they give you the freedom to have it designed by somebody else. And personally, I’m splitting it. I have somebody helping us with the plans who can work with the builder, but they’re not necessarily tied together. So that’s going to be important to you is you’re going to get an elevation drawing site plan. All these things have to get packaged early on in order to present them to the lender in order to obtain financing. So that’s again, this is just part of the initial stuff. Then we have the loan approval, the three C’s. We talked about that already. We actually have to go through a credit report. Look at what you do for a living because you do need to make income and your debt to income ratio has to be within scope.

Speaker2:
Credit score has to be within scope and then we’ll have that down payment discussion at the time. And in the last one is the draw process, which kind of gets us into a specific type of construction loan. The draw process is more political draw. Yeah. Draw is when I need money from the bank to pay somebody or my builder needs money to pay for something. So I’m going to go to the bank and I’m going to say, Mr. Banker, Mrs. Banker, I need X amount of money. Ok. Why, you know, they’re going to ask you some questions, they’re going to go through that and then a one time close product, which is where you’re going to get those programs that allow for a lower down option. There’s actually probably going to be a specific draw schedule set up at the beginning of the process. And that’s important because it means that there are times when money will be available to you and there may be times where it’s not. So that draw process discussion is really important early on so that the builder, you, the banker or the mortgage broker are all on the same page as far as when that money is available to be distributed. So that’s important to remember.

Speaker1:
And on that on that draw process, let’s give you easy visualization. It’s like you do the site work. If that’s all in the construction budget, that would maybe be draw number one. You know, you got your infrastructure draw number two might be the foundation and the framing. And so the general contractor is going to do the foundation and frame up the exterior walls, and then they’re going to get a large cheque for one hundred and one thousand. And then now you’re drying in the house and then that could be a draw. And then the inside of the house could be the next draw. And then the finally the flooring and fixtures and the knobs and the doors, that’d be like the final draw. So sometimes you can get them down to like five drawers that just protects everybody from crazy cost overrun. And then what? I always like to tell the builder who is always worried about the inability to just pick whatever amount they’re going to get paid, is that on like a one time close where we predetermine all the drawers? I just tell the builder I say, Look, all the money is now parked in this account over here, and all you got to do is get the work done and we release the money to you because they kind of get a little nervous about not being able to walk in the bank and throw an invoice on the table and go, Can I get paid for that? And they will. But the banks kind of like, let’s see you cross these benchmarks of achievement and then we’ll release the funds. So on a low down payment project, a little more like that on the local bank construction loan, where it’s easier to kind of like, be flexible, you can go in and just take a draw on anything you want, anytime you want.

Speaker1:
And that’s one of the considerations is if you have enough to put down and you want the flexibility, then you do get that benefit of being able to just kind of grab 10 grand when you need it and stay within the budget. You bet. I wanted to also point out on the process that you mentioned, depending on the speed that you need to go if you’re going, if you have all the time in the world, you basically want to first approve yourself for a mortgage so that you know what your budget ceiling is. So all of those processes, those four processes, the one about getting yourself approved for the loan that could be at the front, and you can do that first and then you can go work on picking out a builder. And then after you pick out your builder, you can get your project approved. But that takes more time and often is the case. People think they’ve been out shopping for a house and now there’s like a crisis because there’s no house and hurry up, build a house, which is hard to do. So if you do want to hurry up and build a house, you probably need to run those processes in parallel, which can be done. And what that would typically look like is while you’re getting your loan approved, your builder is getting approved the same exact time and your projects getting approved and that can be done. So these are all independent processes that can run together or separate.

Speaker1:
So if you’re in a hurry, we would be doing it that way where we’d be making sure your loans approved. We’d be running the builder through their checks and on that builder piece, I just wanted to point out also just to kind of give you, like some people are like, Well, why do you need to prove the builder? He built the house down the street there and everybody thought he did a great job. What the banks know locally that you don’t know is they know which builders, you know, didn’t pay their subcontractors. Well, that’s going to be important. So you may want to hire that builder until you find out they don’t pay their subcontractors, because that can end up as a lean on your house. You get this whole house done. And if all the money got paid out but the general contractor didn’t pay all the subs, that can be a problem for you down the road. So the banks were looking for that. They’re trying to figure out which builders do that hate to rain on anybody’s parade. There are builders out there. Some of them, they don’t pay all their bills now and then there’s good ones, so in the interest of protecting you or just checking those things out. Is this a good member of the business community that pays everybody and maybe they’re available next week, but maybe that’s because they don’t pay their bills. So the bill or approval process is a lot about that. Have they built a house before? And do they pay their bills? And if all that’s good, you can pick whoever you want to build the house, for the most part.

Speaker2:
Yeah, I think I’m glad you mentioned that the loan approval should happen earlier because the other benefit of doing the loan approval with us early is that you actually have the opportunity to have the discussion with an expert on which construction product makes sense for you. So some of the things that are important is you’re going to need to go through these processes, but you’re also early on going to want to decide which category you fall into. Right? Am I a veteran? Am I going to go to the VA one time close route? Am I looking for a low down payment or am I going to go an FHA one time closer up? Do I have land? Do I have a lot of money in the bank? Well, then maybe I should be looking at a two time close because I want some of those flexibilities. We can help you with that as we learn more about your scenario, which naturally takes place in that loan application process. So that’s where you can kind of generate or benefit from having us as an expert in that initial planning stage to kind of help design where we should go from there.

Speaker1:
So and one thing to think about is, let’s say you are a veteran and you’re entitled to a zero down loan and you are excited about that and you want to use it. Well, maybe you also own a piece of land free and clear, and so you’re like, I want to use my VA loan and I have a lot of equity. We may, after going through all the details, recommend that you get a construction loan just down at your local bank where you have a checking account and then use your VA loan to pay that off. There’s benefits to each thing. And so the VA loan. The cool thing about it is it’s great loan. It typically has one of the lowest interest rates and it doesn’t have mortgage insurance. So it’s a great loan. And if you need the zero down feature, which is one of its features, the VA construction loan is going to be the way to go. But if you just need the good interest rate and you don’t need the zero down, then the additional administrative steps might not be worth it to you. So we would explain all the steps and then you could decide Do I want to go to a VA one time closed construction loan or I just want to get a mortgage at my local bank and then I’ll pay it off of the VA loan? You still get to use your VA benefit. So it’s good to isolate the loan you’re approved for to go out and buy a house from the loan that could get you into construction.

Speaker2:
Absolutely, yep, I agree. So kind of in the realm of what we’re talking about a little bit is you want to hit renovation loans briefly.

Speaker1:
Yeah. You bet.

Speaker2:
Cool renovation loan is a similar product to a construction loan, and I think that there’s an opportunity in the Flathead Valley over the next 12 to twenty four months to take advantage of the program. A renovation loan allows you to buy a home that might not pass a standard appraisal or a home inspection. So let’s say you’ve got one hundred and eighty thousand house on the market and you go, Why in the world is it one hundred and eighty thousand? That’s crazy. Nothing exists like that out there. So then you talk to the realtor, the listing agent, you go, Oh, well, these are foundation issues with the house. Little stuff like a foundation, right? So you’ve got all this cost, but you’re in your mind. You’re like, You know what? I can deal with that. And but I need somebody to help me with the financing because I don’t have cash to pay for it. So that’s where a renovation loan comes into play, and it actually sets itself up very similar to a construction loan, particularly on the one time close strategy that we’ve been talking about. What happens is, is you would do the same process. You’re going to actually have a contractor who’s going to be able to do the work to renovate that home. You’re going to come up with a budget for what it’s going to take, and the lender is actually going to loan you enough to buy the property, plus what the budgeted costs are in order to do the renovation. And so the reason why I think that’s important is that there are homes in our area that fit this description. And so if you’re thinking about a way to get into a property that you’re willing to do some work for it to get, it’s a good option and you end up with the draw process. The contractor will get paid, but it’s actually a pretty cool program that isn’t talked about all that often.

Speaker1:
I’ll actually jump in and point out that when the last mortgage crisis happened and a lot of homes went into foreclosure, a lot of buyers, that was the only way you could buy them because a house had been left vacant. You know, it got foreclosed on. It was just sitting there. It’s a completely different market. Now imagine just like a wasteland of houses that you could buy any house you want and nobody wants to buy them. And everybody just stand around looking at them going, How do we buy these? That was 2012, 11 and 10. So how did we do it? Because one of the problems was the owner of the home was Fannie Mae, and you try to call Fannie Mae on the phone and see what happens. Just transfer. There’s no one there and you’re like, Hey, I want to buy this house and they’re like, Show up with the money. No questions. And you’re like, Well, can I turn on the water? No, you can’t turn off. Can I check to see if the electricity works? No, you know. And so you’re like, Well, what about the house? Price is amazing. So the only way you could buy those houses was a renovation loan, so you basically go over there. We would make the best efforts determination of what needed to be done to the house after we own it. And then we would do the renovation. You can do that now, too.

Speaker1:
So basically, as long as we can quantify what needs to be done to bring the house up to a reasonable standard, we can actually loan you above the purchase price through a renovation loan. And it is. It is a great product. I think the way to visualize it is we have to go out with an appraiser and and we do what’s called an as completed appraisal where we say as if we did all the work to fix this house, what would it be worth? And then we build a loan around that scenario. What are the down payment requirements? What’s the construction fund requirement? We are renovation loan is basically a construction loan. It’s usually a little smaller because usually the scope is smaller like you’ve made. You don’t need like water and sewer, or you don’t need a roof. Maybe the roof is there, but you need some stuff like maybe you need to build a few walls and you maybe fix the foundation. So you maybe you only need like fifty thousand dollars in construction money instead of, you know, the entire project. And so it’s a great product. It’s just like a construction loan. It’s just kind of generally it’s a mini construction loan, right? So renovation is great. One thing I wanted to hit on this class because I just got a lot of misconceptions about it is, you know what? What are the costs of getting a construction loan and how does it compare with the regular loan? You know, so as a general rule, I would look at it this way.

Speaker1:
If you go out and buy a house, you have a certain amount of cost to obtain a mortgage. You know, you have to get like an appraisal title. A few things like that when you’re building a house, really, the main difference in cost is going to come down to just a couple of basic items. You have to pay interest during the course of construction until the house is done. So if you go out and buy an existing house, you just move in and start making mortgage payments on construction. You got to pay interest until it gets done. So that’s usually. A line item that people have to think through. Do I want to pay that while I live in another house? Or do I need to work with the lender and everybody to figure out how to only have one housing payment? It depends on your qualifications. There’s ways to do both. But there’s a cost during construction. The other main costs are just being. It depends on which product you get is just kind of that administrative effort to deal with construction. So some banks will will charge an origination fee for a construction loan, and that fee is basically paying for them to go out and inspect the property and to do the stuff they do internally to release the funds because they’re working on it, they’re working on it for the next six to nine months.

Speaker1:
Some banks don’t do that. Some banks charge like administration fees to actually pay a guy to go out and do the inspections. So there are some costs like that as a general rule there in the neighborhood of one percent of the entire budget, and they can be financed into the project. But construction has those costs. There are people that have to inspect the project. There’s people that have to analyze it and release funds and protect from, you know, contractor liens and work with the title company to make sure this thing crosses the finish line nice and clean. Those are administrative costs that don’t go along with a just regular home purchase. Those will be built in, but other than that, it’s not much more different than a regular mortgage. So if you can afford a mortgage, you can generally afford a construction loan of the same size with maybe just like a few thousand more dollars, and some of those can even be financed. But it is important to know that there are some costs that are borne by construction loans that aren’t borne by just a regular home purchase loan. One thing to think about is whichever product you pick for construction. Based on my experience, even if you pick a one time clothes construction loan, one myth about those is people feel like they’re protecting themselves from all the other things that go on in construction by just picking this one loan that everything’s bundled up in.

Speaker1:
And I would say of all the people that I’ve seen that take a one time closed construction loan, almost all of them refinance that loan within a year or two anyway. And it could be for a variety of reasons. But when the bank is doing a 12 month projection on the loan, trying to get it to fit inside of one loan, sometimes the way they mitigate that risk is by putting you an adjustable rate mortgage or the interest rates higher. So you get this one time loan, it’s closed. Everybody’s happy, but now you wish you had a lower interest rate. Could you turn on the TV and saw that there were? So the resolution to that is just refinancing? So the reason to pick a one time close construction loan, in my opinion, is not to isolate yourself from like the interest rate or one of those factors. It’s really just the down payment or the administrative control. If you like the administrative control, you like bundling it up in one loan by having this lender protect you from everything or you just you don’t have any money to put down. And so the lender is going to say, I’ll tell you what, I’ll stand in the gap with you for all the risk, and I’ll just bundle up on this one loan.

Speaker1:
But then after you get it done, you can go back to the market and go, Hey, maybe I can get a better mortgage now, and you probably can’t. So if you have enough down payment to get like a regular old construction loan down at your local bank and you come into Black Diamond Mortgage, we’ll probably going to recommend that you do that because I’m going to recommend that you do it in your best interest. And usually if you have, say, twenty five percent down or 20 percent down, you’re eligible for a loan where you bank and do your checking and savings. And and that’s going to give you so much flexibility that we’re probably going to encourage you to go over there and then we’re going to help you get that loan for free. And then what we want to do is help you do all that. And then when you’re done, we want to offer you really good interest rate on what they call the takeout, which is the loan that pays off the construction lender. So cost wise. Basically, just want to keep that in mind as Construction’s really similar to purchase. There’s maybe just a few thousand more dollars. Other than that, you just get a deal with all the stuff to get a construction loan to happen.

Speaker2:
Bet something else. I think we talked about renovation loans. Talked about construction loans. What if and this is common in the valley right now? What if a builder is choosing to build spec homes? How do I, as a purchaser, consider that when we’re talking about these other options,

Speaker1:
I was great. I almost wish I had brought that up earlier. So a lot of times when you go through this whole analysis of what are my options to build a house, the best option for a lot of people is to buy a builder spec house. And basically what that is is there are builders out there who are building brand new homes and you want a brand new home. So your your why of getting into. Is I want a brand new home or I looked around and there’s no homes available on a brand new home and well, it turns out a lot of builders are out there. They get a lot and they just list a schematic house for sale on the on the multiple listing service for realtors. And it says, I will build you this house and there’s a set of plans and it’s not built yet. You can actually just write a contract to buy it, and it’s the same as buying a house, but they’re going to build it for you. But they hold all the financing. So the benefits are there is no construction loan on your side. The builder carries the financing. They’re just selling you the house. But a lot of times when you work with them, you can get in. You say they’re building the house for five hundred and fifty thousand dollars and you’re like, That’s great. And then you get in and meet with them about what this house is. Well, it isn’t built yet. So if you guys want to go with a different paint color or a different countertop, you can still make that change. It’s kind of like building the house. It’s not quite as custom as if you went to design your own house, but it eliminates the entire construction lending universe. And the builders kind of like it because they they can control their money and they don’t have to, like, deal with the banker. So the builder spec is definitely a good option. The positive of it is it’s a little easier. The negative is the builder holds more control than you do as a homeowner.

Speaker2:
Right? Yeah, I was just going to mention it’s kind of the middle ground there. Construction gives you complete flexibility to do whatever you’d like within the realm of possibility, so to speak, and then buying an existing home. You’re entirely limited to what that house is. Buying a builder spec home kind of splits the difference, so oftentimes you’ll see where perhaps they’ll have a set of plans and then they’ll have an options list. And so they’ll say, you can do all of these 10 options now they’re going to add costs, right? Because they always do. But it does give you a little bit of flexibility, but not a lot. And then the other cool thing about the builder spec is when we’re talking about the three C’s the collateral piece, you can qualify to do a low down option with the builder spec. Because it is, it’s treated more like a purchase than it is like a construction loan. So a lot of lending options are available on those. And I think in the next, I don’t I don’t know. We see a lot of them right now. There’s a lot of developments going up. So I think it’s important for people to be aware that that could be a good option for them.

Speaker1:
Yeah, I think if you go to bigger markets outside of Montana. My wife grew up in Arizona and they build neighborhoods by the thousand homes at a time. That’s how you buy a house down there. You go down and you pick out your model and they have it done in 90 days. It’s a little different than entering a construction loan, but we will see that type of development over the next couple of years. We’ve actually seen it in the past. Usually, it’s more what I’ve seen. More typical in Montana is maybe like a builders doing like four or five homes at a time in the spec arena. And then they, you know, they kind of after they work through a couple, they start another few great way to do it. The smaller scale, the better for you, the homeowner, because then you get a little bit more negotiation with the builder on how you get this thing done. The larger scale they do it, the less they’re going to want to give you flexibility. They’re trying to crank them out fast, but great option to use any loan product to buy a house. It’s literally it’s just a purchase. There is no construction loan when you do a builder spec. So it is it is definitely the the easiest in the realm of you can just buy it from the builder. It’s brand new. It’s brand new house. You know, typically they come just like any other home with a one year warranty. So you get in there and kind of kick the tires a little bit and call them back up.

Speaker2:
Do some touch ups, right? Yeah. So the bottom line of all this is that we got to remember again, kind of going back to that Luke 14 comment that we talked about, which is great. We got a plan in any of the categories that we choose. And ultimately that should lead us to a path that makes the most sense for you and everyone’s different. So I think it’s really important to note that that the path that you end up on is probably going to be very different than your friend who just did this a year ago. And that’s OK. There’s nothing wrong with that. That’s why you need an expert to kind of help you guide through the through the scenario. So remember, that’s a key takeaway plan plan plan. And I could say it 10 more times, and it wouldn’t be enough. So remember that.

Speaker1:
And the more you have, like down payment wise, the more control you get, the more options you get if you don’t have it. If you have a dream to build a house, the the dream is still in play. You can do it. But the more skin in the game that you have, the more options you’re going to get, more flexibility you’re going to get, and that’s going to be good or bad. Some people do well with flexibility, some don’t. But the more. The more down payment or equity you have, the more basically you just get the full gamut of options versus as you as you get less and less ability to put money down. Or less affordability, then you get less options, but you can still build a house. So it’s important to take a look at it. You know, absolutely. Put your toe in there, put your toe in the water or step into the arena. See if it’s something you need to know if you can do or not. The easiest thing that I like to encourage everybody to our office to do is we will get the call about construction. What we really want to do is just give you something to do to see if you can determine that this is still a good idea so that the little packet that we’re sending out, which has got the plan specs, the spreadsheet, you know, honestly, like if you just sit at the kitchen table with whoever you’re with, it’s going to build this house and just try to work through that.

Speaker1:
It’s going to reveal to you just a lot about where you are in the process. Are you ready to do this and do those numbers after you start working on? Do they make sense after you get the numbers on the table? If you need to shrink them, can you shrink them or do you have some room to play because you came in tighter and you thought, you know, but you got to start the process somewhere, so get into that as soon as you can and then let understand that each of these things drives the other. So as you get your budget honed in, then maybe your builder decision changes or then maybe your budget changes, you know, and that’s normal. You have to kind of do that.

Speaker2:
Looks like we’re close on time, but do you mind if I end with a personal story?

Speaker1:
Yeah, might help people.

Speaker2:
Absolutely. So one of the things that I’ll try to be brief because we are close. You are going to hit roadblocks, too, and that’s OK. I’ll give you just an example. We met with our designer to start working on plans, and I, you know, I thought I knew what I was talking about. So I sit down and I had this screenshot from online of a floor plan. I’m like, We just want to make a couple of changes to this. Can you just, you know, move some things around and give us a set of plans? So the lady calmly and kindly goes, well, just draw for me what you’re telling me to do. Oh my, OK. It should be easy. So I start drawing out this this plan. A couple of changes to the one I had in front of me, and she and I sat there and I seriously probably spent 10 to 15 minutes and I could not wrap my brain around what I was trying to illustrate to her. And all she said was, it’s just an exercise. Don’t worry about it. We’ll figure it out. But you need to know that this is going to take a little bit more work than you initially thought. And I was like, Whoa, whoa, OK. Well, that’s important to remember. That was a roadblock, but it didn’t stop us from continuing. It was like, OK, all right. I understand it’s a little more challenging, but I’m willing to do the work. I’m excited to do the work because I can see the end result, which is a beautiful home for my family. So hopefully that encourages you. Don’t worry about the roadblocks they’re going to happen. That’s just part of the process.

Speaker1:
Yeah. I’ll tell you personally, I’ve done two houses myself, in addition all loans that I’ve facilitated. So the first house I did, I general do it myself. Very hard to do in this arena of everything that we’re talking about. I’m going to just make myself an example here, but my angle on doing that was to save money. So I did I think I did save money, but I earned it in the labor that I put into that house. I think for nine months of my life I was I would work every day and then I would side the house and I would paint the house and then, you know, put the trim in the house. And of course, on the trim in the house. I’m not actually a professional builder, but I did save a few bucks by doing the trim myself. But when I sit in my living room now, I can see those spots that I didn’t do very well because I was the one that did it, whereas if I paid somebody else to do it, I probably wouldn’t even know where they made a mistake. You know, so I saved about I think I saved like thirty five thousand dollars. I know what I make in the mortgage business. I think I would have made way more money originating mortgages than the amount of time I spent working on. That helped. But I did it and I I went through the experience and it was so the second one I did. I hired a general contractor and and I will tell you that what I liked about that process was every time I got off work, I walked over to the house and the guys were working on it and I could just walk to the house like, you know, I like this, I don’t like that, and they could ignore me or listen to me, but I wasn’t the one doing it.

Speaker1:
I could just kind of throw my opinion out there and and that was good. They definitely earn what they’re being paid. And that’s a hard thing for people to understand, as if they’re charging 10, 15, 20 percent of the total. You’re like, That’s a lot. Once you go through it and try to do it, it’s actually a very reasonable thing. And so think about those things I’ve done. But if I ever had to do it again a third time, I would definitely hire a general contractor. I would want to use my ability to earn money to just earn more money for the loan approval than to try to earn it by saving a buck on the house. But I was just meeting a guy in the office. Zach and I were just talking to a gentleman yesterday who is a builder, and he wants to build himself and he does save money, and he was actually able to show us how he saves money. And I was like, That guy will make. He will build a house and save money by doing it himself. So you’ve got to do the analysis, figure out where you are in the spectrum. I’m going to real quick, take a risk. I don’t know, is there anybody here in the room that had a question that wanted to get it out that we didn’t answer or anything before we wrap it up? Go ahead.

Speaker3:
So earlier you mentioned that a 10 percent contingency could be put into the budget and everything for potential overages. What happens to those funds if

Speaker1:
I don’t use them beautiful? So the question was if you get a contingency, let’s say it’s 10 percent and and you didn’t spend the money, what happens? So it goes back to you, essentially, so you only borrow what you actually need to spend. It’s basically just an approval amount or a if you can imagine, like, say, you take out a construction loan, this would be a good way to illustrate it for you. But say if you take out a construction loan for a million dollars and in the million is one hundred thousand or ten percent for a contingency, the worry is that you just borrowed a million dollars. And now what happens to the one hundred thousand? The way the construction loan works is you’re just paying interest on what you borrow as you borrow it, and at the end it’s just capped and that’s the loan amount. So if you borrowed a million dollars for construction and you built the house and it was done at nine hundred thousand, that’s all you borrowed. You don’t. Now the scary part is you have to look at loan disclosures that say a million of them because they say, Well, this is what’s going to look like if you borrow the whole million. And just so you know, but you actually only borrow what gets written out as checks out to people and then it caps. So all basically almost every construction loan I’ve ever seen at the end has a modification. That modification is OK. It ended up here. This is now the loan amount. Does that answer your question?

All right. My question to you. You mentioned that you give a sort

Speaker1:
Of choice over some of the details when you do the lower interest. Like someone, you’re kind of like what some of those details might be.

And then I mean, you mentioned like the really expensive eco windows, I can see that being something, but I wonder if there were practical examples that come up.

Speaker1:
And then there are builders

In the area. They can probably make a lot of money

Speaker1:
Doing bigger spec houses.

Do you like that religious instruction, a lot of personal. Right now or.

Speaker1:
You want to try one of those, and I’ll try one. Just read the question.

Speaker2:
Yeah, so the question was if I get it correctly, I want to do a low down option with the builder. Is it realistic to find somebody to help me kind of design my own house? Is that right? Sure. One of the details, yeah, so what are the details you might lose control over? So yeah, the reality is, is that I think it’s probably. A good thing to consider that it might be challenging to find somebody, but I would consider that a roadblock and just kind of deal with the fact that you’re going to have to kind of get over that because there will be someone you just might not have to be flexible on your timing. But some of the custom things that might not be options. Trying to think there are people that like. Well, I should be I should know this because I’m doing it for my house right now, right? A lot of windows. That’s an example. So it doesn’t have to be the expensive ones, but maybe you have a lot of land that has a bunch of opportunity for a view. Maybe if you had a builder who did a spec home, they’re going to like, this is the number of windows we put in a house, period. Well, I want to maximize that view.

Speaker2:
So that could be one. Maybe the maybe you want to put a shop over a garage? That’s a common thing in Montana. Maybe that’s not offered through their standard garage that they put on the house, right? And so those are some things. Does that kind of give you a couple ideas? No. Limiting. Construction will was U.S. Good question. Oh, yeah, so the limiting factors are actually going to come from what you design initially, so you get the freedom if you’re doing a one time closed, low down option, but you’re the one designing. You actually have all that design freedom that we’ve been talking about. You could do those windows, you could do that shop above the garage. But where the where the constricting point is is once you get started, then changes are not necessarily allowed. So that’s where it’s tougher for folks, is that you have to that’s where the planning is really critical is that you’re bound to those plans and specs that you produced initially. So maybe you’re 12 months into a project, you’re like, Man, I really wish I would have done. Well, I’m going to have to figure out how to do that after you’re done with the actual house. Does that make sense?

Speaker1:
Yeah, yeah. Yes. When you’re doing construction, you know you’re going to go through this budget process and design process. And if you’re in your budget like you’re underneath what you can afford on a mortgage, you’re in the driver’s seat, right? You’re going to lose some of that control. If you can’t afford it, you’re going to have to get your budget in line, which would mean making sacrifices. The builder, same thing. Like they you get your budget figured out, you draw it out yourself. You go meet with the builder. Well, if they need more money, there could be constriction put back. So that’s what this whole process is, really. So I think the hardest thing to do is to answer that question without having you start working on it. And I think what you’re going to find is as you work on it, you’re going to go one of two directions. You’re going to go toward construction or away from it, and you just got to be honest with yourself. But the sooner you start, the sooner you’re going to get on the path, which is I would I would just say that general rule and this is not to discourage construction because I think it’s cool. I’ve done it myself, but a high percentage of people that start out with a phone call to our office about construction pivot back to a regular purchase. But for a rational reason, they start down the process. They start adding these things up and they’re like, Oh, this isn’t going to be faster or it’s not going to be cheaper, or it’s now that I’m documenting it now, it’s actually better for me to go buy a house with somebody else. But but now I know because I tried. So once you try, you’re either going to be more motivated to get this done or you’re going to be like, Oh, I get it. I now ruled out in my mind that that’s a good idea. And so either way, either way is fine. Anybody else?

Speaker3:
Go ahead. What if you have someone that wants to do a new manufacture? That same process. And if they don’t to, I don’t want to deal with all, all those little details, they just want to be able to like

Speaker1:
Ship a home and so manufactured or modular something that’s kind of like pre built and just bring it and set it down on the lot.

Speaker2:
Yeah, you bet. It’s doable, it’s treated similar to a construction loan. Honestly, so you’d have I believe you’d end up with a payoff for that house. A couple of things that are really critical is you have to make sure that you have a foundation. So it’s kind of like your. It’s almost a separate scenario, but it is still treated like a construction loan. So you need to apply the land, you need a foundation to put it on and then, yeah, you basically bring that in and you drop it on and then you’re going to get your final inspection. You can close up on the on the total amount, which will include the site work, the cost of it. So that’s what the loan payoff would be, right? When you go to get your final mortgage is cost to the manufactured home cost of the site, where cost of the land all kind of bundled into one. But yeah, it’s definitely an option

Speaker1:
On a pre-built home. Basically, it’s the cost of the manufactured home, the property site work and the foundation, and that’s it. So instead of having a complex construction scenario, you pretty much have it down to three pieces site or foundation. And then then if you think about it, the the companies that sell these, they’re the ones that want the biggest check because it’s the whole house coming down the road on wheels, you know, so once you basically get the property ready, it’s installed over the, you know, a week and then it’s ready. So it’s a faster process, but it is a construction loan because who’s going to hold the ball once we leave the lot where the manufactured home is located and we get it to your property? There’s an in-between zone and who’s holding the ball, then the construction lender because the guy doesn’t. The person owning the manufactured home lot doesn’t want to let it off the lot unless you’re paying and then you don’t want to pay until it’s installed. You still basically need a construction loan, but it’s simpler and easier, but it’s it’s absolutely available if that’s an option you want to pursue. All right, well, thank you. Those online and those here and any time after this, feel free to fire off some questions and don’t be afraid to try and build a house. Thanks, guys.

Have a good day.