by Jeremy Bates Are you financing your new modular home?
If you’re in the market to purchase a new home, chances are that one of the first things you did was connect with a bank for a loan pre-qualification. This is helpful to understand your buying power, down-payment requirement, and what to expect in regards to your monthly payment amounts.
If you’re switching gears, and now thinking about building a new home, rather than buying an existing home, it’s worthwhile to reconnect with your bank in order to update your mortgage prequalification. The type of home loan we need in order to build your new home is called a new construction draw loan, which is a slightly different product than a regular home loan. Not all banks provide a new construction loan, so it’s worthwhile to check in with your loan manager in regards to this.
There are some differences between these types of loans. One of the main differences with a new construction loan is in regards to the down-payment. In most cases, a bank will want you to provide a 20% down-payment on a new construction loan project. However, there are some banks that offer a 10% or even a 5% down-payment option, which you may qualify for if you have a credit score around 700.
Do you already own land?
If so, then the value of the land can reduce your down-payment since this is considered as equity that you already have into the project.
Do you need to sell your current home?
Knowing your home’s value is important in determining how much money you will have available to use as a down-payment for your new project.
As a turnkey builder, our goal is to work closely with you through the entire building project. So if you’re considering building a new home and have more questions about the construction financing side of things, please don’t hesitate to call or email me with questions. And of course, I’d be happy to connect you with a local bank which can pre-qualify you for a new construction loan.
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