*DID YOU KNOW THAT SOME PEOPLE DON'T EVEN CONSIDER NEW CONSTRUCTION BECAUSE THEY MISTAKENLY THINK IT's AUTOMATICALLY MORE EXPENSIVE OR A MORE COMPLICATED PROCESS THAN BUYING A RESALE HOME?
*BUT, BY EXCLUDING NEW CONSTRUCTION FROM YOUR HOME SEARCH YOU MAY MISS OUT ON A CHANCE TO OWN A HOME THAT IS PERFECT FOR YOU & YOUR FAMILY!!
Here are some answers to some of the most commonly asked questions. Please take the time to review them we may be able to enlighten you in regard to some of the misconceptions about building a new home.
GENERAL HOME BUYING/BUILDING QUESTIONS
Q: Do I build or buy an existing home?
A: Many people who build a new home do so for a variety of reasons, some of those reasons are;
After looking at existing homes on the market they realize that what they want is not available, so building becomes the logical choice. This allows the buyer to choose the style, size, colors and specialty items they would like in their home.
Q: When is the best time to build?
A: The cost of construction continues to go up every year, the phase "there is no time like the present" certainly holds true. The cost of materials also continues to rise every year, so very pricing is unlikely to diminish.
Q: Should I sell my home first?
A: You don't have to, If you have cash to build or can qualify for your new home mortgage without selling your present home. You could start construction and list your home. Hopefully by the time you have completed construction, your present home will be sold. (Normally financing is available without selling to those who have a very small mortgage on their present home, and have 20% or more to put down, so they can afford to start construction before selling.)
A: This is a question that varies depending on your needs. If you have a specific style of home or floor plan you are wanting to build, then you need to find a lot that will allow you to build that type of home on it. If you are looking for a certain area to build in and lots maybe limited, then you will need to determine what style or styles of homes that will best suit your lot. It's best to look at lots and at floor plans.
The lot that you have chosen may need fill or even removal of dirt that would add additional cost to you. Having your builder inspect the lot will help you determining the "True" cost of your lot. If you would like to write an offer and your builder hasn't had the opportunity to see it, you should write the offer contingent upon the builder's inspection, (ie. a "feasibility study") in insure that the property is able to be built on in the fashion that you desire and at a cost that is acceptable to your budget. Most builders offer free homes site evaluation that would include the positioning of your home on the lot, a review of the tree that can be retained or cleared and a review of the utilities available.
A: It is fortunate that we have so many competent & skilled builders to choose from in our area that can build in a variety of subdivisions. So you not only have the choice of the floor plan you want, but also the Builder to build it! The saying, "What you get is what you pay for!" holds true in New Construction. The more you customize your home, the higher the price. Changes cost money because it cost the builder more to make them. Your builder knows what floor plans are livable and resalable. You should rely on your builder to help you when choosing a floor plan.
Comparing builders can sometimes be difficult because each builder has their own unique "Standard Features" & they can sometimes very greatly from builder to builder, although all builders must build to the same codes does not mean their homes are all build to the same specifications. So don't assume every builder provides the same exact features, allowances or specifications. It is necessary for you to review what you're really getting for the pricing that is listed. Do your "Due Diligence" as building a new home is one of the biggest purchases you will make.
Q: When should I apply for a new home loan?
A: Now!! Loans applications can be complex and require much documentation and take up to six weeks, so the sooner the better. By getting a lenders' "Pre-Approval" you can have any idea of what you can afford to put in your New home.
A: Yes, most of the local & regional lenders are offering loan programs for New Construction. But not every bank offers that type of loan product it best to ask builders in the area you are looking to build who they would recommend. Programs are available in our area with as little as only 5% down, as wells as the more traditional products with 20% down thus needing NO mortgage insurance.
A: It is best to use a lender that is familiar with building in the area you are considering construction your New Home, and that has a relationship with the builder you are considering, as it makes the process typically smoother for all parties.
A: Generally speaking most financial planners general rule of thumb is that one's mortgage payment shouldn't exceed 25% to 30% of your monthly income. Most lenders are looking for you to have a DTI (debt-to-income) ratio of below 43%.
A: Again, minimum credit scores can vary by Lender as well as the loan program you are considering. The minimum credit scores required currently are ranging between 640 to 720. Again depending on the lender and the program you are using. Of course the better your credit score the better the interest rate you with be able to obtain.
A: Current interest rates can vary, again depending on the lender as well as your credit score. But currently as of Feb 2016 rates are still trending near all-time lows, between 4% and 5% for 30 year fixed rate.
• For example 2: Based on information from our parade sponsor, Third Federal Savings & Loan a 30 year fixed rate loan for a buyer with a 700 credit score, the rate would be 4.54%, APR of 4.657% 20% Down Payment (80% loan-to-value) $250,000 purchase price/appraised value $200,000 Loan Amount At that current rate you can expect the Principle and Interest payment to be approximately: $ 1018.13 (w/out the taxes & Insurance).
A: Required down payments vary by lender to lender & Loan Program to Program, as well as some banks do not offer Construction/Perm Loans. It is best to talk to your potential Builder to see what banks in their area they would recommend who offer this type of loan. But, currently the available lender programs can range from 5% to 30% down toward a Construction Loan.
A: Yes, most Lenders will give you the current appraised value of your land as equity credit towards your down payment requirements. Therefore some Buyers find they do not have to bring any money to the table should they have sufficient equity in their land.
A: A construction Mortgage may seem complicated to those of you who are not familiar with financing, and fortunately your lender will be doing most of the work for you, but here is a brief explanation of the process.
For more information on Construction Perm loans please speak with a construction Lender.
2) CHOOSE A FLOOR PLAN AND ROOM LAYOUT THAT MEETS YOUR NEEDS!
After all, New Homes offer the latest in designs, style, comfort and quality.