Part of the building a custom home is getting the money together.
Part of the building a custom home is getting the money together. Even if you are planning on buying a custom home, you will still need to be able to afford it. However, not every family has the means to do this on their own. So, they’ll have to get a loan. Read on to find out more about how to get a loan for your custom home.
The Essentials
First of all, you’ll need to pay a mortgage. A mortgage applies no matter what route you take to establishing your new custom home. To help acquire a mortgage and a loan, you might have to offer something else as collateral. Once collateral in place, the lender providing you with the loan will probably set some guidelines for how repayment will happen. The investment that you receive will also be relatively short-lived. It will only be for about a year – the approximate length of time, in theory, that it would take to finish building a custom home. The future mortgage will also be tied in with budgets and deadlines connected to the project.
What Happens Next
When you apply for a loan, a common question will be “what happens next?” The lender will want to arrange a schedule that contains information about your available budgetand how you plan to fund the construction process.
Once you are approved for a loan, the bank draft schedule begins. The BDS is tied to the various phases of the custom home construction. While construction is in-progress, you’ll only have to pay interest, but just know that whenever you go to request more funding, the loan’s lender will want to know how the project is progressing. As soon as the custom home has been built, you can move in. After you start living inside your new home, the loan becomes a 30-year mortgage instead.
Options for a Custom Home Loan
You’ll have options for buying an existing home’s lot. Likewise, you’ll also have some decisions to make about your custom home loan. What’s a one-step loan? How does it differ from a two-step loan?
One-step loan: In this loan, the same lender provides the initial construction and the mortgage. You’ll have to complete paperwork for these two steps of the overall process. While you might think this is a time-saver, you should also be aware there will be tighter constraints – for instance, delays won’t be allowed.
Two-step loan: The two loans can be separated. Because you rely on different lenders, you will have much more flexibility and freedom in getting your dream home built.
Cedar Square Homes Can Build Your Dream Home
Cedar Square Homes provides a variety of services to our customers, including custom home building to match your needs. We are trusted throughout Maryland for our excellent service and affordable home remodeling prices. You won’t regret contacting us online or giving us a call at (410) 987-9771. To see examples of our work and stay up to date on our promotions, follow us on social media on Facebook, Twitter, Google+, and Pinterest.