re: How much money to save before building a house?

Yes. The 2 things I was not going to do, were a jumbo loan and pay pmi. My first house I bought we were going to have to do pmi, but to get around it, I did 2 mortgages. One for 80% the value and the other for 10%. The 10% loan was a little higher rate, but I was also able to deduct the interest. I don't believe you can deduct pmi. I didn't mind borrowing a lot of $$ b/c we ended up with a 30 yr @3.75. Figured if I were ever going to splurge a little bit, I might at well do it when interest rates were low. If I had to, I would have put more $$ down to avoid pmi.

One of the other reasons I went with a gc was b/c I knew he could get it done quicker than I could, which would, in turn, save some money while paying the construction loan. During construction, I was basically paying 6.5% on the balance that I owed. I went through the money I was putting down first and then started with the loan money so I wouldn't be paying interest. My builder took right around 6 months from the time he scrapped the lot, till we were ready to convert to permanent financing. There were a few guys in our neighborhood who self contracted and it wasn't unusual for them to still be tied up in their construction loan 8 months in. You can definitely save money by self contracting, but for me, once I weighed what my time and frustration were worth, I made the right decision by paying someone else to be in charge of lining everything up.

I ended up paying 8% to the builder. I did a flat fee. Whatever you do, do not pay a % of total build. You shouldn't have to pay the builder more, just to put in a more expensive light fixture. We ran everything through his company. (ie he payed the bills and twice a month would send me invoices and I would pay him). We ended up 4% over what we originally budgeted for the project.

The rates were one of our reasons for building when we did. We had been paying on the lot for a few years and figured we'd better start building if we were ever going to do it. If I were considering building now, I'd hurry up and get started before the rates get higher.