Building your home can be an exciting and scary process. For some, the stress can almost seem like it may be too much to bear at times. However, by taking things step by step and doing the appropriate research, you can get through it all with a great plan.
One of the best things to do is to take the proper steps when you are preparing to get approved for a new build loan. Building a home has a ton of benefits that you don’t get when you buy an existing house, but you definitely need to be on top of your game to make it happen.
Here are some of the best tips when it comes to getting approved and making sure all of your financial data is good to go so that you can build the house of your dreams.
Read the Reports
The first thing to do is to make sure everything about your credit report is accurate. That includes making sure that everything is up-to-date and that there is no incorrect information hanging around. While a surprise would probably be brought to your attention, it would definitely delay the process and add time on to what is already a stressful process. This is a time in your life where you need to be following your credit score closely, to make sure that nothing unexpected is popping up. Obviously, you need to stay current on any accounts that you may have as well.
Check Your Budgets
One thing that can really affect the preparation of a new build loan is when budgets do not line up with reality. You need to have an amazing understanding both of the money that you are willing to spend, and what your project will actually cost. This is a stage where being realistic is important. Don’t try to stretch the numbers or get fancy when you shouldn’t.
Figure Out Your Loan Structure
There are a lot of different ways that loans can be structured when you are building a home, however most people will opt for a short-term loan that will get you through the build process. That loan lasts a year and usually gets converted into a long-term loan that is more traditional like a regular mortgage loan. Whatever you end up doing, just be sure that you have a game plan figured out.
Keep Interest Rates In Mind
While these numbers seem small, they are actually very important to the process and matter greatly if you are going to be paying down a loan over time. When building a house, you may experience smaller interest rates during the short-term loan portion as compared to the interest rate that exists for the 15-year or 30-year portion. While rates may be lower for adjustable rate options, you need to realize that there are risks to when that rate can be adjusted. All in all, you should hunt for the best financing you can find and be aware of the consequences in the short and long term.