In our professional opinion, one of the first steps to building a custom home on your land is to obtain financing. We realize that applying for construction loan financing can be a stressful part of building a new home. We also know that knowledge can help ease worries. Because of this, we are here to help educate you about the financing process, in an effort to make it a bit less painful!
How to get financed for new construction
When it comes to paying for a custom home, you’re going to need two types of loans–a construction loan and a mortgage. The construction loan finances the building of the structure. Once built, the mortgage pays off the construction loan. Then, you move in and pay on your mortgage, like you would if you purchased an existing home.
Stress often arises because construction lenders and mortgage lenders aren’t the same type of financiers. Most of our clients understand how a mortgage lender functions, especially if they have previously purchased an already-built home in the past. You fill out a ton of paperwork, they check your financial history, an underwriter looks over everything, etc.
A construction lender, however, is a bank and their loan process is not the same as a mortgage financier. While banks do look at financial history, they also make decisions based on the worthiness of the buyer. Usually, they want clients to put some money down or they are leery about lending.
Simply put, there are more hoops to jump through when financing new construction. As initially stated, this can cause stress for our clients. So, we try to make construction loan financing easier.
How Elements Design Build makes construction loan financing easier.
Construction lenders are more favorable to applicants who have hired a reputable builder. Fortunately, we have developed some strong relationships with banks. Thus, we can recommend several bankers with whom we have worked. We trust them, and they trust us.
Once approved, we will complete necessary paperwork for draws and keep financial records of monies spent. We utilize an online construction software management program, CoConstruct, which allows us to keep extremely organized records. (You can read more about that here.)
Truly, we are ready to be your guide and help alleviate some of the stress that comes when dealing with construction loan financing.
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