When it comes to building your home, the right financing is the real foundation that everything else will be built upon. First Federal Lakewood can help you with this all-important first step by providing the expertise to help you navigate the world of mortgage loan options.
To get you started, we’ve put together this list of five important steps to help ensure a successful start.
Step 1 – Find a lender
You may be tempted to stick with your current bank out of habit. But a smarter move is to do some research. Find a Mortgage Loan Originator who is well-versed in construction lending and ask him or her how many new construction loans they’ve personally handled. Foster a relationship with them. Ask plenty of questions. And remember that some banks take a “one-size-fits-all” approach to mortgage lending, failing to tailor the loan to your build. Every new construction loan should be unique to the individual buyer’s needs.
Step 2 – Get pre-qualified
Many people get too swept up in the exciting details they’ve seen in a model home. They begin a conversation with a builder before they’re even pre-qualified for a loan. By speaking with a lender first, you’ll know what you can actually afford based on your debt-to-income ratio, among other criteria, so you can consider a new home that makes sense for you financially. Getting pre-qualified also tells a builder that you are a serious buyer, not just a shopper.
Step 3 – Ask for numbers in writing
This is best way to really assess the affordability of a home build. Ask your builder for a detailed breakout of the home’s final cost, including the costs for change requests, upgrades and fees. You can then take those numbers to your lender to calculate your down payment, monthly payments, rates and closing costs. Having the figures in writing not only binds the lender and builder to those numbers, it also allows you to easily compare loans and find the best fit for you.
Step 4 – Find loan products that fit
Every mortgage has its share of options and variables, but with new construction there’s even more to consider. One important factor is the build time, typically four to six months, with custom properties taking even longer. Will you be able to make your current house payments while paying for the new build? This is an opportunity to ask your Mortgage Loan Originator about the bank’s unique loan options, such as a Bridge Loan. This loan features special rates and terms that enable you to comfortably stay in your current home while your new one is being built. It can help remove the risk and add a little more convenience.
Step 5 – Rely on your relationship with your lender
Your relationship with your lender shouldn’t end after you secure a loan. Early on, your bank should walk you through what to expect at every step. And throughout the process, they should be available to help you navigate each of those steps. Remember, from helping you work with the builder to explaining what needs to happen after you close on the loan, your lender is there to help.
For more information on how First Federal Lakewood can help simplify your mortgage loan process, for a new build or an existing home, visit our Mortgage page at www.FFL.net/mortgage.