Q: Is it true that it’s harder to get new construction financing instead of a loan for an existing home?
A: While news reports in recent years may imply that financing new construction is difficult or impossible, that is simply not the case. There are options available for financing the home of your dreams.
Construction loans are typically the most utilized and most desirable when building a new home. These loans are set up like a line of credit and draws are taken to pay the builder and sub-contractors as the home is built. After completion of the home the loan is rolled into a permanent loan of your choice.
Another option is for the builder to carry the financing during the course of construction until the home is completed. Upon completion, permanent financing would be issued by your lender and the builder would then be paid in full for the home.
There are several ways to structure your permanent financing. Key choices to consider are how much you choose to put down on your loan, 30 year vs. 15 year financing, mortgage insurance paid either by the buyer or by the lender, etc. Every client’s needs are different so every client’s scenario is different and it is important to discuss all the options available with a qualified construction lending expert.
Please submit questions to firstname.lastname@example.org Jon can be reached direct at 360.907.5800. Tune into Green Building with Jon Girod on 1550 a.m. on Saturdays at 9 am. See you next week!