If you are thinking of building a new home as opposed to buying an existing home, it is useful to know the financing alternatives on the market. Financing new construction is much different than buying an older one. The terms, rates, and processing may vary. Here are some common Southern NH new home financing alternatives.
Construction mortgages are temporary loans designed to disburse necessary funds during the construction process. There is typically a schedule for when funds are released and in specific amounts. Certain goals must be attained at each phase. The costs, interest calculations, and other terms will differ by mortgage company. Construction mortgages are treated as high risk, therefore requirements are normally more strict than other mortgage programs. A regular mortgage takes effect before possession.
Construction to permanent mortgages involve only one closing. Throughout the construction phase, interest-only payments are normally required. Once building is completed, the mortgage converts to a typical mortgage with customary monthly payments. Interest rates are usually set when you first start the process, but the lock for the permanent portion of the mortgage might have an expiration. If the property runs longer than planned, your interest rate for the permanent mortgage might change.
Builder Financing for New Home
Builder financing is the best option for a home buyer because construction costs are obtained by the builder. Buyers are often required to provide a larger deposit and to pay for upgrades up-front. Buyers must obtain a mortgage at closing.
Southern NH New Home Financing Alternatives
Financing alternatives on the market will depend on whether you own the lot or the builder does. Self-owned lots often require a construction mortgage of some type. Builder financing is normally offered within builder-controlled subdivisions. Alternatives may also differ by mortgage company as many offer special programs. Speak with a lender to learn all of the different Southern NH new home financing alternatives and related fees before making a decision.