So, you’ve decided to build a new home rather than buy an existing house. Owning a brand-new home has several advantages, including lower repair costs, higher energy efficiency, and the opportunity to customize your home’s features. But how do you finance building a new home? For many people, the right way is to secure a new construction home loan.
So, if you’re considering building a home in Tampa Bay, here are three expert tips for securing a mortgage:
Create the Blue Book
Typically, you’ll need to provide your lender with a project timetable and a realistic budget when applying for a construction loan. You’ll also have to provide a comprehensive list of construction details, from floor plans, ceiling heights, and types of building materials to insulation. Your Tampa Bay builder can help you create this blue book to include all these details for your home-building project.
Assess Your Financial Health
Construction loans are often considered higher risk. As such, you’ll need a strong credit (usually a rating of 620) and a down payment of 20% to 25%. But lenders will determine the specific down payment amount based on the cost of the land and planned construction. And if you already own the land, you can use it as equity for the construction mortgage.
Research Construction Loan Lenders
As mentioned above, construction loans require a large down payment and lots of time spent securing financing. As such, you should do your due diligence on your potential lenders to ensure you get the most favorable terms for your loan. Find out about any additional conditions for the loan as well. For instance, some lenders require payment for two closings and having multiple appraisals done on the property (before and after the construction).
Learn More about Mortgages for Building Homes in Tampa Bay!
The dream of building a home, the “maybe one day I’ll build” vision, is very attainable and affordable with new construction home loans. If you’d like to learn more about how you can secure a mortgage to build your home in Tampa Bay, don’t hesitate to give us a call!