The third step in planning a new home should be to establish your best guess estimated budgets (the estimated cost to build). The best way to do this is to contact a reputable and experienced certified builder to set up a meeting to discuss your lot location, conceptual plans and ideas for building your new custom home. Knowing how much you want to spend for your home will help the builder and the mortgage bankers when they are offering advice. With a little planning we will be able to discuss some details about your new home regarding square footage, size of rooms and some of the amenities that you would enjoy in your new home. Have a good idea about what products you desire. Every homebuyer has different wants and needs and no two custom designed homes are the same. It is very difficult for a builder to give an exact price on just a concept. But you should be able to get a rough estimate within $25,000 to $75,000 of the total price provided you do not add items at blueprinting stage or later. A rough estimate can sometimes be calculated by price per square foot but again the builder is estimating a concept and not a completed blueprint drawing. You will need to know what you can and cannot afford to build when it comes down to lot selections, blueprint designing, mortgage financing, and selection allowances. Hard pricing will come after the plans, engineering, and soils reports are completed. This later bidding process will lead to your contract price.
4. Mortgage Banker Selection
There are many different types of home loans. Finding the right mortgage company with the terms you desire may take some research and analyzing. Select two or three recommended banks or mortgage companies that fit your personal and financial needs. Ask your builder for references of bankers and/or mortgage companies used most often and who are experienced. A certified custom homebuilder will have some recommendations from which to choose. When a new home mortgage is involved, a pre-approval should be obtained from a competent bank or mortgage company reflecting the maximum amount you are qualified to borrow. Choose your lender and loan officer carefully.
The complexities of financing the building of a new home are far different from a simple refinance or purchase of a pre-owned home. Lenders not experienced in new construction loans could cost you thousands of dollars in additional closing costs. You should contact these mortgage lenders or bankers to help establish how much you can afford to invest in a new home. Knowing the amount of money you can finance is important in planning and estimating your down payment, monthly payments, and terms of your mortgage loan. Your personal income, credit report, financial assets and liability risk are the areas that determine the bank's formula for loan approval This knowledge will help you choose the total price of what you can afford to build and budget into a new home.
Some mortgage loan programs provide you with both construction financing and permanent financing. This is called a Construction/Permanent loan and involves only one closing. If you qualify, you should consider this program as this can offer substantial savings. There are many other financing programs available. Choose a loan program that best fits your needs as far as terms and interest rates. With construction financing and permanent financing in place, you are at a decided advantage knowing what you want to spend when dealing with the professionals who will design and build your new home.