Welcome to Home Mortgages
Low Cost Mortgage Article
This is a selection made from among articles on Low Cost Mortgage. For a permanent link to this article, or to bookmark it for future reading, click here.
How to Finance and Build Your Dream Home
from: Dan Wood and Sherry Guard If you have always dreamed of building and living in the home you've helped design, it's time to seriously consider putting your dream into action. In today's mortgage market, a specially designed loan for just such a homeowner, the construction to perm loan, includes the construction loan to build the house, and the permanent loan to purchase the home. Mortgage lenders used to offer this as a two part process, first financing the construction loan and building the house, then obtaining another mortgage to purchase the home. There were two closings, and two sets of closing costs with this type of loan.
The construction-to-permanent loan allows for one application process, one
closing, and one set of closing costs and is simpler, cost-effective, and less stressful for the applicant. Some construction to perm loans allow custom building of a home with an adjustable low payment during the construction process. For those who may have purchased a piece of land, or intend to buy a piece of land then build on it, this informational article will show you how to finance the custom built home before it's built. When choosing a lender and a builder, take the time to find viable partners in your custom building project who share your vision for your dream.
Lots for Building Custom Homes
It is often best to select a finished lot. This means the lot is equipped with water and sewage systems, electricity, and road access. The lot should also be recognized as a single piece of land and have a boundary designation recorded with the county or city.
Finance Your Custom Built Home with a Mortgage Broker
Breakwater Mortgage, in Virginia Beach and Williamsburg Virginia, is a Mortgage Broker. Mortgage Brokers have a wider variety of loan programs for consumers to select from. Visit a mortgage broker for the most competitive deals on a construction to perm loan. The lender will want to investigate if the land is appropriate for building by reviewing the land survey and building plans first. They will also check to see if the contractor is on the approved list of builders. If not, the selected builder will have to submit an application to become one.
Select the Builder of Choice for Your Custom Built Home
Many of the larger name builders are already approved for many lenders. Ask the lender if your builder is approved. If not, most private builders and architects can easily apply through lenders. Each lender has different criteria for builders. If the homeowner is not satisfied with the builder they have selected, many loan programs allow them to fire the builder and begin with another approved builder. This gives the homebuyer power over their own destiny during the custom building and construction process.
Consumer Highlights for Construction to Perm Loans
Construction to Perm Mortgages are written for primary and secondary homes. They are not allowed for investment property. Construction to Perm mortgages are not written for modular, pre-fabricated, or manufactured homes, either. One unit is allowed per mortgage. The construction term of the loan is from six months to 12 months, with exceptions up to 18 months on some products. Ask your mortgage loan officer about subordinate financing. There are also creative financing options available for homebuyers who want to put the minimum down and pay a low interest only payment while the house is being custom built.
Lender Requirements for Construction to Perm Financing
Lenders require standard credit documentation and high credit scores for construction to perm financing. Lenders also request: 1. Final plans and specifications (needed to obtain appraisal) 2. Purchase contract for lot (or settlement statement if already purchased) 3. Property profile (a description of materials for custom building). 4. Line item cost breakdown from the builder 5. The builder's construction contract 6. A copy of the builder's license 7. The builder's statement or application (showing the company as approved or applying to be approved to build a home). In addition to these documents, it is essential that the homeowner obtain the necessary permits to build in the community.
Benefits of Construction to Perm Financing
Construction to Perm loans are a single close loan, and the consumer obtains financing before construction. This gives the homeowner cash to pay the builder and complete the construction. Construction to Perm is a fully amortized loan. Nothing changes in the term - it's one mortgage. One of the greatest advantages to the homebuyer with this type of home financing is some lenders allow interest only payments while the home is under construction. This gives the homebuyer a low payment option in the beginning while living somewhere else. Once the home is occupied, the mortgage payments are changed to principal and interest payments.
Financial Suitability for Custom Built Homes
High credit scores are important to lenders for construction to perm mortgages. Liquid assets are also carefully scrutinized. For homebuyers interested in construction to perm financing, the lender will look for adequate savings to pay for the mortgage during the construction period of the loan.
Down Payment
Expect a 3-10% down payment to be required, depending upon the loan amount for the construction to perm financing. Smaller pieces of land or smaller loan amounts will require a lower down payment.
From the vantage point of the loan officer, construction to perm loans are a win-win situation. The homebuyer is purchasing a loan they feel comfortable with. They have a reasonable payment during construction, and business with the lender is concluded at the time the loan is made. This type of loan allows the person building their custom dream home to take control over their biggest asset during the most critical phase: construction. With financing in place, the borrower can make sure the final product is exactly what they want it to be.
About the Author
Sherry Guard worked at Beneficial Finance as a loan officer prior to joining the Breakwater Mortgage team. Sherry has an honest and straightforward business style. She believes in treating her clients with the integrity she would expect in any business transaction. E-mail Sherry at sherry@breakwatermortgage.com or visit http://www.breakwatermortgage.com.
Dan Wood is a Managing Director and Sales Manager at Breakwater Mortgage. He has been a
Low Cost Mortgage Specific links
Watch Free Videos At Mevio!
- Tons of Free Videos, Only At Mevio.com
-- http://www.mevio.com/
Learn How To Stay Young and Feel Great
- Free Advice For Boomers From Experts Around the Country
-- http://www.boomj.com/
The fastest and easiest way to chat with anyone.
- Chat with anyone, anywhere, anytime with Utterz.
-- http://www.utterz.com/
American Idol Gets Fourth Judge
- One of the fastest growing sites on the net, and yea, theres a reason
-- http://www.holytaco.com/
Car-Parazzi
- If you love cars, join the Car-parazzi. And if someone car-parazzi's you... smile and rev, it means you've got a hot car!
-- http://www.car-parazzi.com/
Low Cost Mortgage News
Three Fannie Mae execs out, shares rally earlier - Reuters
NEW YORK (Reuters) - Fannie Mae (FNM.N: Quote , Profile , Research , Stock Buzz ), the biggest U.S. mortgage finance company, on Wednesday announced a shake-up of top executives, including the exit of its chief financial officer, in an effort to ...
Read more...Dell introduces PCs for emerging markets - Chicago Tribune
BEIJING — Dell Inc. unveiled four low-cost computer models for China, India and other emerging economies Wednesday in a new bid to tap the potential of high-growth markets outside the U.S. The two notebook and two desktop PCs are the first Dell ...
Read more...Transcript: Color of Money Book Club - Washington Post
Personal finance columnist Michelle Singletary hosted an online discussion with Carolyn Warren , author of "Mortgage Rip-Offs and Money Savers" (John Wiley & Sons), on Thursday, Aug. 28 at Noon ET. Carolyn Warren: I list 7 disadvantages of an ...
Read more...Fannie, Freddie Post Biggest Profits on Mortgages Since 1998 - Bloomberg
Aug. 27 (Bloomberg) -- The crisis of confidence that sent Fannie Mae and Freddie Mac debt costs to record highs above U.S. Treasuries is also providing the mortgage-finance companies with the biggest profits on new investments since at least 1998 ...
Read more...Fannie, Freddie Mortgage Profit Rises With Debt Costs (Update2) - Bloomberg
Aug. 27 (Bloomberg) -- The crisis of confidence that sent Fannie Mae and Freddie Mac debt costs to record highs above U.S. Treasuries is also providing the mortgage-finance companies with the biggest profits on new investments since at least 1998 ...
Read more...Foreclosures ensnare low-income renters - Los Angeles Times
Ruth Cordoba has never owned a home, but she is feeling the effects of the mortgage meltdown acutely. Cordoba, 28, rented a three-bedroom home in Riverside for six months with the help of so-called Section 8 funds, money provided by the federal ...
Read more...Home loans: Mortgage approvals plunge by 65% - Guardian Unlimited
The crisis facing Britain's housing market was highlighted yesterday by figures showing that mortgage approvals have plummeted 65% in the past 12 months while buy-to-let lending has also declined sharply this year. Only 22,448 mortgages were approved ...
Read more...House prices 'fall 10.5% in year' - BBC News
UK house prices have seen an annual double-digit fall for the first time since 1990, according to the latest survey from the Nationwide. Prices were 10.5% lower in August than they were a year ago. Prices fell by 1.9% compared with July. The average ...
Read more...Durable goods report helps drive stocks higher - MSNBC
NEW YORK - Wall Street turned sharply higher Wednesday after the government reported a larger-than-expected increase in orders for big-ticket manufactured goods that indicated the economy is stronger than expected. The Dow Jones industrial average ...
Read more...Sending Your Kids to College - KFSN
(KFSN) -- Sending a kid to college can be a real challenge for parents. Especially when incomes aren't keeping up with the rising cost of higher education. Can't afford college? You're not alone. The total cost of a degree from U.C. Merced is about ...
Read more...