Sunday, September 6, 2009

Now is The Time to Build that Dream Home

I came across a great article today about the amazing opportunity we have in this market.  Simply put, there is no better time than now to begin construction of a new home.  Home builders are offering great opportunities right now for families to get into their dream custom home, and interest rates are at an all-time low.

To summarize, construction loans can help consumers get into their dream home where they may not otherwise qualify for a traditional mortgage.  A construction loan in the beginning is a story loan.  Since it's a story loan, it is not going to be a standard mortgage loan that would be within the Freddie Mac or Fannie Mae guidelines.  Typically, a construction loan will finance the land and any land improvements, such as clearing, grading, utilities and driveway.  It will also cover the actual building costs and even all finishes in the home, such as carpeting and appliances.  In short, it covers the expenses from beginning to completion.

Most construction loans usually require an interest-only payment only on the amount of funds drawn on the loan during the building process.  Many lenders will also work with you to automatically roll your outstanding balance into a permanent loan once construction is complete.  In order to lock in a low rate, ask your lender if they have an option of purchasing a rate-lock agreement that will be valid through the expected completion of the project.

Most importantly, it's important to know the majority of lender will not let you be the contractor unless this is your full-time occupation.  A client may think they can save money by acting as their own general contractor, but experience has shown that typically leads to disaster.

Always ask questions and never give up on that dream of being a homeowner. If you are thinking of making your dream of building that perfect home a reality, talk to a professional lender first.