If you’re considering building a custom-built home but are missing the funds to do it, you might need to look into getting a loan. One thing to keep in mind, though, custom home loans are different than home-buying loans. You’re taking out a construction loan on something that does not exist, whose final value won’t be known for months or even years. This means there is a much higher risk for the bank, and therefore, much stricter requirements for you. Luckily, here are a few things to keep in mind to acquire a custom home loan.
Seek Out a Custom Home Specialist
Your usual home-buying loans are the same across the country, with the same guidelines. For construction loans, ever bank has a unique approach. Because it’s a unique process, it’s usually best to work with a lender who is a seasoned veteran with custom home loans. Somebody who has learned from their mistakes, who can anticipate any problems and hold your hand throughout the entire process. Your builder might be able to point you in the right direction as well.
Prepare for Tough Requirements
From each angle, construction loans are difficult to obtain, and borrowers need to be in better shape to qualify. You’re going to need a much bigger down payment than you would with a regular mortgage. Income level requirements and credit qualifications are also much higher.
Prepare for Higher Costs
During a lengthy custom build period, more services are usually required. This would include sending out a draw inspector when your builder needs the money and sending appraisers at least twice. This all adds up to higher closing costs for a loan for your custom home, possibly more than twice as much compared to a traditional home-buying loan. Check up with your lender to know what to expect.
Pick Your Builder Carefully
The loan process isn’t fun, but experience custom home builders, like Robin Ford, can assist you with some of the burdens by consulting with you on your total project. This includes budgeting, site development, planning, building, and staying on schedule. Keeping these aspects in check and organized will help you in acquiring a loan for your custom home.
Robin Ford can help you to build the custom home of your dreams!
With over 30 years of award-winning custom home building experience, Robin Ford and his team of expert craftsmen have earned a stellar reputation for their commitment to quality. Click here to learn more about financing options and how we can help you build a home within your budget.
As an Indoor airPLUS Partner, ENERGY STAR® Partner, Certified Green Professional, and Maryland’s only proud member of the exclusive Southern Living Custom Builder Program –Robin Ford Building and Remodeling, Inc. is equipped to build you a home that your children’s children will want to own.