Your Dream Home Does Not Exist…Yet!
By David Kuiper - MBA, CMA, CMPS
By David Kuiper - MBA, CMA, CMPS
Congratulations! You’ve made the decision to build your new home, located where it will be, selected your builder and finalized your new home plans…but wait a minute! How are you going to pay for it?! While sometimes a last-minute thought, a new construction loan is an essential tool for building your new home.
New construction financing differs from a traditional mortgage loan in that something that does not yet exist needs to be financed. The most popular approach to new construction financing today is the use of a Construction-Permanent Loan, which offers the following features:
- One loan for both the construction phase and the permanent financing
- Only one set of documentation and closing costs for both phases
- Ability to lock in interest rate at beginning of project
- Checkpoints at time of each draw
- Interest only monthly payments on balance advanced to the builder
- At completion/occupancy the construction loan converts to the mortgage loan
- Available with a variety of downpayment options, loan programs and extended rate lock options
- Am I able to lock my interest rate now so I know what it will be when my new home is complete?
- Is the interest rate the same for both the construction period and the mortgage loan?
- How long do my builder and I have to complete the new home?
- Will I need one or two loans to build my new home?
- Are downpayment requirements different for new construction financing?
- What kind of payments do I make during the construction period?
- What if the house comes in under budget? How about if it comes in over budget?
David Kuiper, Vice President of Mortgage Lending is a new construction financing expert with Northpointe Bank in Holland, MI and is actively involved with the Lakeshore Home Builders Association. David can be reached at 616-726-5583 or david@davidkuiper.com.
Lakeshore Home Builders Association
-
Sue Schurman Executive Officer
- September 01, 2020
- 616-392-6233
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