New Home Tips, Trends, and Ideas - Raleigh Custom Home Builders

2014 New Home Loan: How do construction loan down payments work?

Posted by Penny Hull on Tue, May 27, 2014 @ 13:05 PM

New Home Construction Loan

How do construction loan down payments work?

How much are construction loan down payments for 2014 new homes?

In the current market, banks are requiring from 5-20% down.

When you contact Stanton Homes, we'll provide a list of more than 10 different lenders that offer construction financing. 

How do I apply for a construction loan? 

Step 1: Get Pre-qualified

Before choosing a home builder, get pre-qualified for your mortgage.   A pre-qualification will give a good idea of how much you can spend on your new custom home. 

What Kind of Down Payment is Needed?

This is a tough question, because builders’ requirements can differ.  A general guideline for your equity investment is 5-20% of the cost of the home.  Many of the major lenders and builders want to see “skin in the game”.  But with the right combination of lender and builder, the out of pocket expenses can be greatly reduced.

Along with your investment into the equity of the home, you will incur closing costs for the permanent and construction loan closings – typically in the range of 2%-3% of the loan amount. 

What is a Typical Deposit Amount?

Once you've narrowed down your list of builders, ask them about down payment and investment requirements before you sign a contract. 

While builder requirments can vary, Stanton Homes only requires a $5000 deposit on most new custom homes. 

Tags: getting a construction loan, construction loans, construction to permanent

Green Mortgages | What is a Green Mortgage?

Posted by Penny Hull on Mon, Jan 31, 2011 @ 06:01 AM

What is a Green Mortgage, and How Does it Work?

How Green Mortgages Help You Buy a More Energy Efficient Home 

Green Mortgages | How Does a Green Mortgage WorkGreen mortgages are based on the principle that a more energy-efficient home means lower utility bills, with more income left over – qualifying a prospective homeowner to buy a more expensive house. 

A green mortgage provides you a bigger loan than normally permitted, as a reward for making energy-efficient improvements or buying a home that meets particular energy-efficiency standards

Borrowers can finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans.  

Here’s how Green Mortgages work: 

Energy Efficient Mortgages (EEMs) are used to purchase a new home that is already energy efficient. Energy Improvement Mortgages (EIMs) are used to purchase existing homes that will have energy efficiency improvements made to them.

EEMs (and EIMs) are sponsored by federally insured mortgage programs (FHA and VA) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac).

Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs. These mortgages allow home buyers to add as much as an additional 15 percent of the sale price into the loan, for upgrades such as energy-efficient windows, water heaters, or solar panels. The savings in energy bills offsets the higher monthly mortgage payments, creating more savings over time.

How can you qualify for an energy efficient mortgage?

For a newly constructed home – the home must be certified by the builder that the home was designed and built to meet energy efficiency guidelines (usually through a third party inspection process). 

A home energy rater can also inspect the home and issue a Home Energy Rating System (HERS) report certify that the house is energy-efficient.   A HERS rating usually costs between $300 and $800. This could be paid for by the buyer, seller, lender, or real estate agent. Sometimes the cost of the rating may be financed as part of the mortgage.

This report is used by the lender to increase the borrower's income by a dollar amount equal to the estimated energy savings.  These programs also allow for higher debt ratios because of the presumed energy savings. 

The energy savings will translate into higher value from the property as seen in an appraisal/market value.  Having a HERS report will increase the value of a home. 

Homeowners will also be able to take advantage of the Energy Policy Act soon, which gives tax credits to consumers who conserve energy.

By the way, green mortgages have a lot to offer. But the concept is not new. Major lenders backed by Fannie, Freedie and the VA have financed green mortgages (currently promoted under the Energy Star Program) since 1970.

Information courtesy guest author Brian Laible at Primary Residential Mortgage.  Call Brian at 919-256-3133 for more information about Green Mortgages.

Ask the Financing Expert Series

Stanton Homes continues to offer the information you're looking for.  Other popular questions include:

If Interest Rates Go Up, How Will My Buying Power Change?

Construction Loans - What Kind of Down Payment is Required?

How Do Construction Loans Work?

Check back for more construction home loan and other financing questions from our new "Ask the Expert" column, featuring Brian Laible, Senior Loan Officer for Primary Residential Mortgage. 

Send us YOUR questions to "Ask Brian", and look to Stanton Homes for the answers you need.

sBrian Laible - Ask Brian!

Sr. Loan Officer, Primary Residential Mortgage

701 Exposition Place, Suite 118, Raleigh, North Carolina 27615

919.256.3133

 

ecoSelect Third Party Energy Certification –

The ecoSelect certification in your new home indicates that the construction is designed to provide higher levels of energy efficiency, per the national HERS index, with better indoor air quality and water efficiency than standard new homes.  We're not afraid to have third party inspectors check our homes carefully, for your piece of mind and long term value.  Learn more about new homes with lower energy costs, here.

 

*Stanton Homes is not a lender, not offering lending advice, and is not affiliated with Primary Residential Mortgage.  For answers to lending questions, contact a trusted lender.

Tags: construction loans, ask brian, ask the financing expert series, will interest rates go up, construction to permanent, green mortgage, energy efficient mortgage

Construction Loans: What Kind of Down Payment is Needed?

Posted by Penny Hull on Thu, Oct 28, 2010 @ 11:10 AM

Ask the Financing Expert Series

Construction Loan Down Payments - How Do Down Payments Work? 

Ask the Financing Expert Brian LaibleBrian Liable, Sr Loan Officer, and Primary Residential Mortgage, answers your home financing questions.

Custom" doesn't have to mean "expensive" when it comes to building a new home. 

From the construction loan to permanent financing, local experts can tell you everything you need to know - before you sign the bottom line. 

Custom home builders like Stanton Homes can help you understand what you're getting for every dollar you spend.

And we'll help hook you up to all the details you need, with frank answers to blunt questions like these, in our “Ask the Expert” column:

Today's question:

"What Is a Typical Construction Loan Down Payment or Deposit?”

Brian answers:

What kind of down payment is required to build a custom home?  I hear this question quite often, and here’s how I answer it:

Get Pre-qualified

Before shopping for a builder, get pre-qualified for your mortgage.   A pre-qualification will give a good idea of how much you can spend on your new custom home.

What Kind of Down Payment is Needed?

This is a tough question, because builders’ requirements can differ.  A general guideline for your equity investment is 5-20% of the cost of the home.  Many of the major lenders and builders want to see “skin in the game”.  But with the right combination of lender and builder, the out of pocket expenses can be greatly reduced.

Along with your investment into the equity of the home, you will incur closing costs for the permanent and construction loan closing – typically in the range of 2.5%-3% of the loan amount.

 Is it possible to Lower the Financing Cost of your New Custom Home?

One way to save money building your new home is to put the construction loan in your name instead of the builder’s name.  With this process, you will be required to make monthly payments (interest only) on the construction loan, for money that you have used.  That means the builder received draws as each stage of the home is completed and inspected.  There may be an additional upside for the homebuyer, as interest expenses can be tax write offs.

Are Lower Down Payment Options available?

At our company, we have worked out a new construction/permanent financing arrangement where buyers are able to put as little as 25% of the lot price as a down payment, plus $5000 for project start up, as opposed to 5% - 20% of the entire project cost.

What is a Typical Deposit to a Custom Home Builder? 

I work with a lot of great builders and each has their own minimum deposit requirement.  Stanton Homes, a custom home builder in Raleigh NC, only requires a $5000 deposit on most new custom homes. 

Ask your builder about down payment and investment requirements before you start your home building process.

Options are also available to recoup some of your new home investment.  Ask me how.

Call Brian at 919-256-3133 for more details.

 

Ask the Financing Expert Series

Stanton Homes continues to offer the information you're looking for.  Check back for more construction home loan and other financing questions from our new "Ask the Expert" column, where Brian Laible, Senior Loan Officer for Primary Residential Mortgage, will answer financial questions like "What type of down payment is required?" and "Are one time close products available?"  

Send us YOUR questions to "Ask Brian", and look to Stanton Homes for the answers you need.

sBrian Laible - Ask Brian!

Sr. Loan Officer, Primary Residential Mortgage

701 Exposition Place, Suite 118, Raleigh, North Carolina 27615

919.256.3133

*Stanton Homes is not a lender, not offering lending advice, and is not affiliated with Primary Residential Mortgage.  For answers to lending questions, contact a trusted lender.

Tags: construction loans, ask brian, ask the financing expert series, construction to permanent

Construction Loans | How Do Construction Loans Work?

Posted by Penn Hull on Wed, Oct 20, 2010 @ 10:10 AM

How Do Construction Loans work?

Ask the Financing Expert Series

Comparing Construction Loans with Permanent FinancingConstruction Home Loans | Custom Home Builders | How Construction Home Loans Work

 

Brian Liable, Sr Loan Officer, and Primary Residential Mortgage, answers your home financing questions.

Today's question:

"How do Construction Loans Work?"

 

 

Construction loans are short term loans with interest-only payments that are intended to last the length of your new home construction - up to one year.

Your construction loan can be used to purchase a lot and pay for the home's construction, and you will only have to pay interest in segments.

The construction loan will be accessed gradually by the custom home builder, who can only take out a certain amount of money at a time, as specific parts of the home are completed.  

The construction lender reviews the progress of the home to determine how much of the loan they are willing to give the builder.

Construction Loans:  What About when the Home is Complete? 

Once your custom homebuilder has completed your home, you will need to get permanent financing, with terms up to thirty years. 

Typical permanent financing options include:

  • Conventional financing (80% of the appraised value or less)
  • FHA which requires only 3.5% deposit based on the sales price
  • USDA and VA which allow for 100% financing of the sales price. 

All of these types of financing options can be used to pay off construction loans. 

Construction Loans:  Is Construction Financing Available?

Yes, a variety of construction loans are available, with many different options and structures.  Call Brian at 919-256-3133 for more details.

Ask the Financing Expert Series

Stanton Homes continues to offer the information you're looking for.  Check back for more construction home loan and other financing questions from our new "Ask the Expert" column, where Brian Laible, Senior Loan Officer for Primary Residential Mortgage, will answer financial questions like "What type of down payment is required?" and "Are one time close products available?"  

Send us YOUR questions to "Ask Brian", and look to Stanton Homes for the answers you need.

sBrian Laible - Ask Brian!

Sr. Loan Officer, Primary Residential Mortgage

701 Exposition Place, Suite 118, Raleigh, North Carolina 27615

919.256.3133

*Stanton Homes is not a lender, not offering lending advice, and is not affiliated with Primary Residential Mortgage.  For answers to lending questions, contact a trusted lender.

Tags: construction loans, ask brian, ask the financing expert series, construction to permanent