You can easily avoid frustration and stress by starting your home-building process with a few helpful insights. Today’s article will discuss the top five tips to help you get the most out of your home-builder financing. These tips will also help you avoid significant setbacks in your home construction project.
Few things are as rewarding as a ground-up home construction project since it lets you build your home to fit all your and your family’s needs. It allows you to grow and expand your home the way you want. However, anyone who has built their home can tell you it’s pretty challenging and time-consuming. But it does not have to be this way. Looking at a few tips and understanding what you are about to do can help save a lot of tension and headache later. Before getting home-building financing, let’s look at the top five things you must keep in mind.
Hammer Down Your Plan
Planning is easily the most critical part of the home-building process. If you want your property to follow a cozy and natural flow, you must plan your home meticulously. Remember where the sunlight hit in the morning will? Where do you think should be your primary bedroom? Will your home lighting include large windows and skylights? What are the best places to install electrical outlets and light fixtures? Remember, you will always need more sockets than you believe.
You can easily find a wide range of useful tools online that can assist you in planning out an ideal design for your property. You must address this stage before accessing home-building financing. If you are looking for help, try to fill your mind with creative ideas that you would like to incorporate into your home. You can always start a Pinterest board for all the different rooms in your home. It’s also an effective way to communicate your goals and plans to your builder.
Budget More Than You Expect
You may already know what the entire home-building process will cost you. However, you should be ready to find out it will cost a lot more. Several things may arise during the process that you or your builder did not estimate. It includes costs like electric meters and gas, window coverings, and several other needs. Your builder might not include fencing, letterboxes, concrete, or other things in your final finishing costs.
These costs can cost as much as 15% to 20% of your total budget. You will also have to take care of site costs and zoning fees, the total cost of preparing your home for the construction project. You must also have some extra funds if your construction has unforeseen costs during the project. As your builder gives you the play, you may see a few areas you may like to alter before the building is completed.
Get Your Financing In Order.
If you are constructing your home from the ground up, you must apply for home-builder financing. A home construction loan differs from a traditional one since the lender will not release your funds in a single payment. They will provide you with a certain amount for your construction project, and the bank will make payments (to you or your builder) as they see fit. These payments are generally referred to as Draws. You can easily tap into these funds during different stages of the home-building process.
You should always be ready before you start searching for home-builder financing. Another way home-builder financing is different is the deposit. Since a home construction loan is risky for the lenders, they may ask you to put down as much as 20% as a deposit. Remember, your home construction loan will be based on the value of your home after construction. Hence, you must always present a complete property plan with financial plans in place.Â
Your DTI
Anytime you apply for home-builder financing, the lender will check your DTI ratio. It is the percentage of your monthly income used to pay your current loans. It includes car payments, mortgages, student loan debt, credit cards, and child support. An acceptable DTI ratio tends to vary depending on your lender and may range anywhere from 28% to 40%. To calculate your DTI, you must add up all your monthly payments towards debt and divide it with your pre-tax monthly earnings.
Know What You Are Entitled To
If this is the first time you are building your home or planning on making an eco-friendly property, you might be eligible for a few specific grants depending on where your property is located. It can be a significant advantage that can help you offset the total cost of your home construction project. If you want more information about this, we suggest you speak with a professional mortgage broker or local council.
Contact Real Estate Funding Solutions To Learn Everything You Need To Know Before Getting Homebuilder Financing!
Our Real Estate Funding Solutions experts have years of experience helping people get financing to build their dream homes. Our team deeply understands home-builder financing and can help you get ready to take on such a serious undertaking. With our help and professional guidance, you can quickly start your home construction project immediately. Call us at 855-913-8637 for more information.