The journey to your dream home is made easier and more satisfying thanks to a couple of key partnerships along the way.
A custom builder with the expertise and professionalism to “make your dream happen” is the obvious 1st step.
A very close 2nd is the relationship you develop with a lender.
Thankfully, a reputable builder will already be approved by several lending institutions and can point you in the right direction to learn about your individual lending options.
However, if you have a trusted connection already established with your bank, you may want to approach them to see what they have to offer as well.
Regardless of who you choose to work with, there are a few vital steps that you can take to keep the process worry-free.
1) Talk Early With Your Lender
Have you ever stepped into a strong flowing current and realized how easy it would be to get swept down the river?
It is a similar feeling when you begin the process of building YOUR dream home. The excitement of meeting with your builder and talking through all the amazing possibilities is like taking that first step into the rushing water.
But establishing a realistic budget with a lender – EARLY in the process – is the best step you can take toward protecting yourself from getting carried away.
Frequently, new-home clients put off this critical step until after their hearts and minds have committed to a specific end result. Unfortunately, this leads to difficult and disappointing decisions later in the process.
2) Know the End Rate
Chances are if you have never built your own home the financing piece can seem almost impossible.
In fact, circumstances of life might appear to be an impenetrable roadblock against your happiness. New homeowners can quickly be out of their comfort zone thanks to:
- An existing home to sell
- Tying up all extra cash with a down payment
- Interest rates threatening to go up
- Still paying on a home lot
However, nowadays, lenders are creative in the construction-perm loan packages they put together, and they can alleviate many of your concerns.
One important option to look for is locking in your ending interest rate.
With a construction-perm loan, you only pay interest on the money AS it is used – not on the total amount.
Locking in your ending interest rate can save thousands of dollars over the 10-month timeframe it takes to build YOUR home.
3) Keep Open and Regular Communication
All healthy relationships require transparent and regular communication – and it is no different with your lender.
Remember that this is YOUR money and so it is wise to stay involved through the entire process.
A competent and experienced lender will remind you that it is crucial to your borrowing status to avoid any large purchases that can impact your debt to income ratio.
Be proactive in your relationship and let the lender know if anything significant has happened on your end.
Remember that your lender is a partner in making your dream home a reality. Keep him in the loop.
Final Thoughts
Sometimes the simplest of steps can make all the difference in having a stress-free experience. And this certainly applies to financing your future home.
Establish a relationship with a lender early-on in the building process. Know what all the terms of your loan are and lock in your ending rate. Be proactive about keeping your communication open and consistent.
Enjoy the homebuilding journey.
