When you're ready to start construction on your dream home, the house is not the only thing you'll need to build. You'll also want to build strong relationships with your banker, your builder and your mortgage originator.
As a banker specializing in construction lending, I've guided hundreds of people through the journey of building a home. When compared to buying an existing property, building is usually a longer and little more complicated process. Most people would probably say it was definitely worth the effort, though--especially when moving day comes. The experience of moving in to the home you and your family planned, customized and detailed to your specific and unique needs is priceless.
So you have your house plans and your lot (or maybe you don't--that's ok, too!). What's the next step when you want to build and need financing to do so? I would advise starting with your banker.
Your Lender
When a customer tells me they are ready to build a home, the first thing I'll do is spend some time with them--usually one to two hours.
Like the homes these customers are building, each customer's needs are different--there's no "cookie cutter" situation. I've helped people who are already well into the process (they have secured a building lot, selected a builder, drawn up plans, created a list of materials they'll need and know how much they will borrow) as well as those who don't know where to begin.
In the latter situation, we'll talk through those steps, beginning with how much house they can afford to build. To do that we'll thoroughly review their credit, income, assets and liabilities and come up with a cost range that we're both comfortable with. If I see anything that may keep them from getting the funds for their construction, we'll talk about how we can work together to fix those issues.
We'll also discuss lending options to find the solution that best fits their needs.
Most customers need a "construction-to-permanent" loan, which is essentially a short-term line of credit to draw from during the building process then a mortgage loan for long-term financing. Again, every mortgage is different. Sometimes a customized in-house loan is the best option, and in other situations, the customer will look to traditional (Fannie Mae, Freddie Mac, FHA, VA, etc.) mortgage solutions.
I think it's important to make those plans up front, so if a traditional mortgage is the best route for my customer, I'm very proactive in getting them together with our mortgage originator.
Your Mortgage Originator
Bank Independent's mortgage originators are very accessible, so I'll usually ask our originator here in Athens to meet with me and the customer during the early days of the construction loan conversations to discuss long-term financing plans--however, we're very careful not to overwhelm the customer.
Building a home is a big decision, and it's important to me that the Bank's role in the process is a comfortable, seamless and supportive one.
I'll have already shared the customer's credit file with the orginator before we meet, so during this conversation we're basically reviewing and confirming the customer's financing options and decision. We can even go ahead and schedule the loan closing if we have all the information we need.
A lot of the information we need, though, comes from the customer's selected builder.
Your Builder
I always work very closely with a customer's builder throughout the lending process--from obtaining a cost breakdown, building plans and licensing information from the builder so we can begin the loan qualification to visiting the build site to make sure things are going smoothly (and on budget!). If a customer hasn't yet selected a builder when they first visit with me, we'll talk about what kind of house they are building and I can usually recommend some great builders in our area who specialize in that particular type of construction.
Like your relationship with your banker, your relationship with your builder should be one of mutual trust and respect. You want to find a builder who will make the construction process as seamless and enjoyable for you and your family as it can possibly be.
Building your dream home can be exciting and daunting all at once, but it doesn't have to be a painful process. You can lean on your lender! Let us help you navigate through the confusion of construction so that you can look forward to more exciting things...like moving day!
If you're thinking about building or buying, click below and we'll give you a call to scheduled a time to talk one-on-one.
