Building your dream home can seem like, well, a dream. However, take it from us that it can in fact be a realistic life goal. These mortgages can help you make the impossible very possible.
Just like it sounds, this is for situations when you don’t need to come up with full funding until the home is complete and move-in ready. You’ll need to provide a down-payment when you make an offer to purchase the planned home. Once you do this the mortgage you are approved for is advanced to the builder at possession. This is a single-advance mortgage and is the same as a regular residential mortgage.
This type of mortgage will give you funds at specific intervals as the house is built. Generally, you’ll need to provide a progress report and have an inspection in order to secure the next “draw” of funds. While the number of draws can vary, it is common to have three: one at rough-in, one at completion, and a final draw when you take possession of the home. Once the home is completed, the mortgage will be converted to a conventional home mortgage. Keep in mind that you will need to pay for progress inspections, and interest payments may be payable or accrue. Funds are released to the builder through your lawyer.
As with any mortgage, you’ll need to complete a mortgage application so your lender can review your credit and income. While you are waiting for your home to be built, make sure you don’t make any big changes to your financial situation. For example, try to avoid making major purchases. In fact, it’s best to take on NO new debt. Until the home is in your name – and your mortgage is complete – you’ll want to hold the line on debt and ensure your employment is stable (this isn’t a good time to switch jobs).
Building your dream home is an exciting project. Come in to speak with us as early as possible in the process. We’ll outline the documentation you need to obtain your construction mortgage and then get the process started. As always, our goal is to do this efficiently and in a way that’s stress-free for you. Finally, it’ll be time to set sail!
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Rasha Ingratta & Mortgage Associates
By Mortgage Intelligence
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