Whether you’re a picky home buyer or looking to take on a new and exciting creative challenge, building your own home is an extremely rewarding experience. In doing so, you’ll have the benefit of controlling every creative decision that goes into your house, making it the perfect place for you and your family to call home. However, building a house is more than what you see on HGTV. It’s important to understand that the construction of a house requires a lot of understanding, planning, and most importantly financing. Simply forgetting or accidentally leaving out a step can easily derail your dream home and end up costing you more in the long run without careful financial planning. With these tips below, you can feel confident knowing that you’ve checked all the boxes to create a sturdy financing plan and therefore will hopefully avoid any interruptions with the construction of your dream home.
- Make sure you assess your current finances
This may seem like an obvious step, but it’s important to take into account your current financial situation and double (even triple) check that you are in the right place to afford the construction of a new house before getting started. For many of us, a construction loan is needed to start our home building project. A construction loan (or self-build loan) is a short-term loan used to finance the construction of a real estate project. Because self-build projects are considered to be risky, they typically have higher interest rates compared to mortgage loans – so that’s important to be aware of when looking to get approved for a construction loan.
It’s also important to note that construction loans usually require a 20% down payment in advance, so ensure that your credit and financial history are in tip-top shape. If you’re building on a property you already own, you’re one big step ahead already!
- Call in the right people to help
If you’re already an expert in building or planning the construction of a real estate property, that’s fantastic. Again though, the planning and execution of building your own house is no easy task, so ensure you have the right people helping you plan every last detail of your new home. Having every last detail included in your plan will be especially helpful when looking to secure a construction loan. You, as the borrower, should have what’s known as a “blue book” prepared in advance of applying for the loan you need that details the specifics of the construction process. You will also need to show the lender that you have a qualified builder or construction team involved in the process. The more information you have for your lender, the better your chances of getting approved for the loan you need.
- Talk to your financial advisor or mortgage broker
If you want to ensure that you’ve reviewed every last detail down to a single nail, work with someone who can give you the best financial advice possible! I, Darren Robinson, would love to take your dream home and turn it into a reality. Building a house doesn’t need to be an overwhelming process. By sitting down with me, I can show you step-by-step how to financially prepare, plan, and finance the construction of your future home. You might even have financing options available, you haven’t thought of yet if you already own a home you can pull equity from. Call me today at (705) 315-0516 to set up an appointment. Let me walk you through the different loans and options you have so you can get your dream home started!