Only you can decide what the right scenario is. Your gut will usually steer you in the proper direction. I can only tell you how free my husband and I feel right now without any loans on our property. No one can take it away from us if times get really sour. Naturally, you still have taxes, insurance, and upkeep, but building a reasonable home takes the pressure off of that. We look at our land and feel thrilled that it is truly ours. As long as someone has a loan on their home or land, they do not own it, the bank does. Try missing a payment or two if disaster strikes and see what happens. Disaster can be a major unexpected illness or accident, natural disaster in an area, or economy based. Was it a hassle to sell a house while living in it? For sure! I hated that process. (Fortunately, we sold in under a year). We decided the short term nuisance of selling while in the house was still better than owing a bank for more money. The interim of not being in my new home yet is difficult at times. I'm in a small place in the meantime. I'll admit, I'm spoiled and want it now. However, in the home scheme of things, it's only a short term inconvenience, and then I'll be through with construction and in my home. And I do have a decent roof over my head in the meantime. Also totally ours. As far as construction loans go, yes, they are given out in draws, but we had been locked into an interest rate that was good for the life of the construction loan, and grandfathered into the mortgage itself. However, the way the banks are now, that may no longer be the case. Keep in mind that a lot of banks will not let you be the owner/contractor, but it doesn't sound like that is the way you want to go anyway. Now the issue about equity loans. They are hard to come by these days, even with a perfect credit score. I have a friend who is vice president of a bank. She said that they have had many people borrow against a home they are currently in, and no longer wanted. Of coarse, they never tell the bank they no longer want the home. They say they want to make improvements, or whatever. With the real estate market what it is, it can take time to sell. So, they are buying another home with the equity money and letting the bank foreclose on the one that was no longer wanted. This has made getting home equity loans harder to get than hens teeth, and hurts the honest people. You may also find it very difficult to get the equity loan processed, funds dispersed, and a new home totally constructed ready to move in, within a year. Even with a reputable builder, homes are seldom done in the exact time frame we want. The banks are approving loans, setting closing dates, and then either pulling the plug for some lame excuse three days before closing, or re-setting closing dates over and over, due to "needing more papers filed" that come out of nowhere. Good luck in whatever decision you make. It's never an easy one, and I wish you the best.

Bill, Thanks for the comments. Yeah, seems kind of weird, at one point our van was worth more then our house. But looking at old tax records, house values have really dropped here, while farm land has gone up. Not sure what the deal is, but not much I can do about it. Our house has dropped by almost half in the last 4 years. I think that is in part to a lot of houses are sold by auction around here, and things normally do not sell for as much then. When we got the van, a few years back, we lived in a better house, in a different town, and my wife was making more money, and the government was giving annual raises on SSDI, not that I like using it, but finding a job is next to impossible.` I agree on the taxes, I like to have it $100 or so either way. This year she have filed exempt, so there are no Federal taxes coming out. The bulk of our refund is from the EITC, which is part of the reason the country is in so much debt, but I don't think they will let us just give it back and say no, sorry put it towards the national debt. Her school does not do advances on the EITC, but yeah, that would really help. Your thought on the car loan is a good one, but if we can't get a home equity line through our bank, I doubt we could get a personal loan. Seems that would have the potential of putting us in a worse situation as well, if things didn't work out just right. If we could get 16,800 on the house, which is 80% LTV, I could free up $575 in monthly payments. At 15 years 7% that would be a payment of 151.00 a month for a cash savings of $424.00 per month. I could actually pay off about $625 worth of monthly payments if I paid off a few medical bills that are not charging interest, for a savings of $474 a month. If I put $100 towards an emergency fund, $74 towards the food budget, because ramen noodles get old after 3-4 times a week, and the rest to the remaining revolving accounts, they would be paid off in no time. Then in 3-4 months when we get our tax refund, I could pay off about another $200 worth of monthly payments. So, in less than a year, we would be revolving debt free, with no need to increase that again. Then I would start paying off the installment loans starting with the highest interest, which would be our van. After the van was done, I would add $200 to the emergency fund account, instead of the $100, and put the remaining $600 to student loans and such. Of course, some of the cash saved each month would need to go to heating bills for the winter, but I still think, in a year or year and a half we would be revolving debt free. So, I have done some thinking and figuring on this, it is not like I decided, "hey, lets borrow against the house to make ourselves go in to more debt". For our situation, it is what seems to work the best for now. I have discussed things with a credit counseling agency, but they can't really reduce my monthly payments by enough to make it worth it. They can't do anything about student loans, auto payments, or the medical bills. On the revolving accounts they could save us about $100 a month. But, if I ended up with a high heating bill, I have to decide between paying the heat, and paying the CCA to keep the contract good with them. At least this way I have more control over our cash. Not that I have done the best job lately, but I do have a plan to fix it. Michael

Realtor fees for what? For building house on your own lot with the builder he recommended? Are you selling house to yourself? Will there be a listing of your own house on your own land? Do you have a contract with this realtor? Tell him "thank you for introducing me to the builder. $1000 - is all that you get." - take it or leave it because I am nice. Builder 6%? Really - that seems very low.

Building permit costs here are all over the spectrum. There are dirt cheap areas and castle amount areas. Having helped build about 40 Habitat for Humanity homes and having my own remodeling company caused me to become quite familiar with inspectors. Especially because the Greater Kansas City area has about 32 class 2 or 3 cities in the Metro and they all have their own building codes and inspectors. Basically, the bigger cities(Kansas City, Kansas, Overland Park, Kansas, Lenexa, Kansas, and Bonner Springs Kansas have decent codes offices and inspectors. The other 12 or so cities on the Kansas side have inspectors who are often part time. While many of those folks are actually nice people, many of them are a bit short on knowledge of the building codes and procedures. I had an inspector fail me on a rehab reframing job because I had too many studs in the walls. He said ONLY 16" on center, 12" was not code. Long involved story as to why, but a call to his boss fixed the situation. 16" on center is minimum code, more is not exactly necessary, but not wrong. And I have done unpermitted work(legally, following that cities building codes) with an inspector visiting a job next door about three times a week. We talked frequently. So, huge differences by different locales. Very often, when in an unfamiliar location, knowing an inspection was necessary, I contacted the inspector and had them explain what they looked for---made the work much smoother. I still did better than minimum code work, but seldom had an inspection problem.