Parade of homes is off and running…new construction may be the answer to your housing needs!


9.15 blog picParade of homes is off and running.  Foot traffic, or the amount of people out looking at model homes, is very high. Our low inventories of existing homes are bringing lots of folks out to check out the options at builder models. Buying a new construction home, or building a new home for the ground up, can be the experience of a lifetime.

Let’s look at new construction options. Maybe a client already owns a home or piece of property with a structure on it that needs to be torn down; or perhaps they own a lot or acreage with no structures. Both are scenarios where I can be of help, and builders are happy to work with. Not all new construction needs to take place on a finished lot in a new development – there are ways to build on a less conventional lot. The process for the construction loan is nearly the same in both cases.  We need to consider the value of the land or lot you already own in addition to the cost of the new home.  Value for the completed project is what we are after, as we lend from the “as completed” value.

For a vacant lot or piece of land already owned by the client, we gather plans, specifications and contract from the builder and request for the appraisal to be “as completed.” There is no existing structure that needs to be removed that would cost extra for demolition. The appraiser will give us a value of the finished product on the lot or land you own. We can then use the equity you may already have in the land to minimize the amount of additional cash you need to supply. This is a great way to go, and loan-to-value follows purchase guidelines rather than refinance guidelines.

When there is a structure on the land or lot, there is an added twist – the structure will need to be removed to make way for the new home to be built. There can be extra costs involved to demo the existing home or structure. If the property in question was a primary residence, we also need to follow refinance rules with some loan-to-value restrictions. There may also be a mortgage to satisfy, which needs to be taken into account when we calculate what your max mortgage will be.

Either way, new construction can be the answer to your housing needs. I’ll be happy to go over your plans and work through any scenarios you have. New construction is one of my specialties, and I look forward to discussing your project.  – Randy Cullen, NMLS #326128


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