When you are looking at building a new home, chances are you will have questions regarding the options available to you in regards to financing the building process. Most people just assume the bank or similar financial institution will be the holder of the mortgage. And most people would be correct…most of the time. But another option in some cases is the contractor financing option.
The contractor financing option simply means the building contractor collects a set percentage of the price agreed upon to build your home in stages of construction with regular monthly payments beginning when they hand you the keys to your new completed home. Some builders don’t even require you to have a deposit-just proof of ability for repayment. If your builder does require a deposit, once you get your home buyer assistance monies (if you qualify) you can pay back your savings or whatever source you used to obtain the deposit from. Interest rates are holding at around 6% mark; making the investment in a home a sound and economical one. Some builders will ‘sell’ their loans to banks at some point in the loan, which in turn means you will be making your payments to a bank.
Getting a loan for your house or land/house package from your builder will require much the same application information as with a bank or other financial institution. So to speed the process of application acceptance, look it over carefully before filling it out to make sure you have everything you need to provide the required information.
Because there are variables in the when/why/how of builder financing, we strongly advise sitting down with the builder you select to go over their individual requirements, expectations, fees and repayment options.