You’re ready to build your dream home, but it’s likely that you do not have the available cash to pay for the complete project up front. Many individuals save for years before they’re able to even afford the down payment! So, if you were buying an existing home, the path to take would be applying for a mortgage through your bank. Covering the cost of construction for new-build homes means acquiring a construction loan. The question is, can you use your own bank, or do you have to work with the preferred partners of a new home construction company like Natale Builders?
There are two main avenues for securing the money you need for new home construction – a Single-Close Construction Draw Loan or a Construction End Loan.
A single-close construction draw loan is a type of financing used to fund the construction of a new home. It involves a single mortgage that combines both the construction loan and the permanent mortgage, so the borrower only must go through the loan application process once. During the construction phase, the borrower can draw on the loan to pay for building materials, labor costs, and other expenses. When the home is completed and the construction is finished, the loan is automatically converted into a permanent mortgage, and the borrower begins making regular mortgage payments. This can be a convenient option for borrowers because it avoids the need for multiple loan applications and closing costs, and it allows for a smooth transition from construction to permanent financing.
A construction end loan is a type of financing that is used to pay off a construction loan and provide the borrower with a permanent mortgage. It is typically taken out after the construction of a new home is complete and all the building inspections have been passed. The construction end loan pays off the balance of the construction loan and converts it into a traditional mortgage, at which point the borrower begins making regular mortgage payments. The terms of a construction end loan are usually similar to those of a traditional mortgage, such as the interest rate, loan term, and monthly payment amount. The borrower may be required to provide additional documentation and go through another round of underwriting to qualify for the construction end loan.
You can work with your own bank to explore the best new home construction loans, or you can seek the help of the professionals at Natale Builders to explore our preferred partners. We realize how important it is to secure financing that fits your long-term goals, and we partner with reliable and secure new construction lenders. The Neighborhood Sales Managers at Natale Builders can take you step-by-step through the process so you understand all of your options.
Natale Builders has extensive experience helping homeowners through the process of securing the best lending option. We’ll help you find the appropriate financing to ensure your project is completed exactly how you envisioned it. Our team can meet with you to review the budget for your custom home, discuss the ‘must-haves’ for your space, determine which type of financing is required, if needed, and locate the best new home construction lender for you.
