How Do I Finance A New Construction Home?
Posted by Rick Merlini on Wed, Oct 20, 2010 @ 07:29 PM
How Do I Finance A New Construction Home?
By Rick Merlini
Live Well Custom Homes
Birmingham, Michigan
Certified Professional Master Builder
2 Time ABC Extreme Makeover Home Edition Home Builder
Once you have decided to build that new custom home you will have to decide how to pay for it. The two must common methods of finance that new home are the following unless you have a very rich relative.
- A Construction to Perm Loan is exactly what it sounds like. It start off as a construction loan and then at the completion of the home it turns into a permanent home mortgage for you.
Pros
- It is just one closing
- Builder should give you a discount for finance the home.
- If your builder qualifies for this type of loan it is an accepted way for most builders
- It locks you into a rate
- Closing cost are just a little more than a regular loan because of the necessity of an appraisers have to appraise plans and make inspection very time they is a draw
Cons
- You will have to start making payment from the first time you draw on the loan.
- You will need 20% as a down payment.
- 2. Builder finance construction with an end loan.
Pros
- Your closing cost are a little less
- You are not making payments on the money borrowed directly,
- Will take less down payment
Cons
- Not many builder are able to do this
- Will cost you more because home builder taking bigger risk
- Builder will pass interest cost to you through his end sale price.
I hope this helps you to understand the financing part of building new construction home.
Remember, greatness in is the details. It is those small details that will make the difference.
Good luck building your new home. If I can help you in anyway or answer question you may have about
- building a new home
- buying a new house
- Selling your new home
- Remodeling Your new home
Feel free to contact me. Thanks for visiting.
