How To Get a Loan for a New Construction Home

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How To Get a Loan for a New Construction Home

October 7, 2023

If you’re considering the option of building one of the Colorado Springs CO homes, there are a few extra steps necessary compared to buying an existing home. You can still get a new construction home by purchasing a spec home that is already on the market and brand new, but you miss out on the opportunity to put in the finishing touches that would make your home truly feel personal to you. With some advance planning, obtaining a loan for a new construction home doesn’t have to be challenging.

There are different types of construction loans to consider if you choose to build a home. You’ll generally have an easier time if you’re already working with a builder like Creek Stone Homes who builds in specific communities, so that the lot is already available and ready to build on. You may or may not need a construction loan, depending on the builder. If you do need a construction loan, there are various specific types of construction loans, including ones where the money is paid out during the construction and then is turned into a traditional mortgage. This often lets you lock in better rates or avoid having to pay fees on two separate loans. You can also take out construction loans separate from a regular mortgage, but these are often more costly up front and need to be paid earlier.

Another benefit of working with a home builder is that they typically have preferred lenders. While you don’t need to choose one of their lenders, they often offer incentives, such as lower interest rates or help with closing costs. Ideally, you should talk to all of the builder’s preferred lenders, but check with other lenders, as well, as they may have loans that work better for your particular financial situation. Don’t forget there are VA, FHA, and other loan types that can still be used for new construction. Regardless of which lender you choose, it’s best to work with one who is experienced with new construction home loans, because they better understand the timelines and milestones involved and make sure payments are made at the appropriate time.

Regardless of the type of loan you get, your finances will need to be in excellent shape, just as they would for a traditional pre-owned home. You’ll also need to wait for the Certificate of Occupancy that says the home is safe and securely built. The lender will also need to go in and see the final project to determine the final value of the home and how much of a mortgage you’ll need. This is one area where builders’ preferred lenders come in handy as they’ve likely tracked the construction costs throughout the project.

While there are extra steps in building one of the Colorado Springs CO homes from scratch, the extra paperwork and costs can be worth it when you end up with your ideal home. If you’re ready to build your dream home, contact Creek Stone Homes today and let us help you get started on this exciting journey.

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This post was written by Creekstone Homes

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