When building a new home, before one plank of wood is nailed or before one square yard of concrete can be poured, you must create a budget–a realistic budget to set the parameters of what you can, comfortably, afford. This means a lender needs to be obtained to officially get the ball rolling.
Getting pre-approved for a construction loan is your first big step. Don’t be too surprised when you discover that a building loan’s interest may be higher than other loans you’ve secured. Also, your credit standing and income will be the determiners of the amount of money a prospective lender will be comfortable with dispersing. If you are fortunate enough to own an existing home, its equity will, favorably, be considered in the construction loan process since it can provide additional funds for the home-building’s financial plan.
Assuming the construction loan is pre-approved by a lender, you will become the proud new owners of what is called a ‘home-building budget’ which will be ear-tagged, specifically, for the amount that will be, eventually, granted. Congratulations! Becoming pre-approved is something to be proud of since it serves as a testimony to your character and financial trustworthiness.
Stay Focused And Proactive:
Here’s where a new home-buyer needs to stay extremely focused and think ahead. Become far-sighted, so to speak, and realize that it will require attentive planning to see to it your money stays within or under budget. It’s not uncommon, at all, to encounter minor budget overruns with new-home construction; and because of that, skim 10-15% of the budget off the top and set it aside for unanticipated expenditures.
There are local and state fees you need to become aware of; and accompanying permits and inspections will be paid from the home-building budget.
Ask your lender to break down, monetarily, each phase of the construction of your home. Typically, each aspect of the building process, is allocated a generic percentage of the total amount of money lent. By breaking down all the costs of each phase of construction, you will gain a clear picture of exactly where your money is going and you will be more inclined to remain extremely diligent with consciously remaining within the monetary parameters.
Perhaps you have decided on a specific style of home, or perhaps you haven’t. Your home builder can help guide you in this direction since the choices can be overwhelming. Hiring a reputable home-builder cannot be overstated. You may speak with one builder or more than one; but it’s imperative you have specific questions ready to present to your selected builder. Questions such as: “How long have you been a home-builder?”-”Can we contact any of your previous clients?”-”What sets you apart from other home-builders in the area?” It’s up to you, the buyer, to do your homework and make sure you feel totally comfortable with your builder in terms of his character, reputation and expertise. Aside from being reputable, make sure your builder is insured and licensed.
Once you sit down with your home-builder, he will be able to give you an accurate estimate of what you can expect to pay for the type of home you have selected.
Back To The Lender:
The cost estimate you receive from your builder will be presented to the lender who will, more than likely, allocate the money you were pre-approved for. One thing to help ensure an air-tight loan approval is to see to it your estimate from the builder is lower than the pre-approved amount.
Best of luck and may your home-building experience be an enjoyable and memorable one!
Miss Carlson enjoys writing on many different subjects, and home building is one thing she writes a lot on. Check out Dunhill Homes, if you need a new home builder in Las Vegas.
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