New Construction Home Mortgage Options
What Sort of Mortgage Options Are There For New Construction Homes?
With the inventory of homes available for sale being tight in many markets, home buyers are looking at new construction homes. With a new construction home a buyer can buy a newly built home that is ready or almost ready to move in. Or they can select a floor plan offered by a builder, select a lot/location and select the finishes and fixtures as permitted by the builder. For financing that new construction home purchase there are different options to consider as this article explores.
Some new construction homes are available in new developments and the builder is building new homes in particular lots that have been set up previously. For other new construction homes the buyer is responsible for finding the land for their home, purchasing that land and then getting in touch with an architect and/or builder to plan the actual home. The land for the home can be anywhere where there is enough space to build the desired home and the land is buildable.
Mortgage lenders do offer land loans to purchase land although the interest rates and terms of land loans are not as favorable as a mortgage loan for an owner-occupied home. Lot loans are viewed as somewhat riskier to the lender for a variety of reasons and hence come with higher interest rates and shorter overall terms. Buyers may get a better deal if they get a loan that covers the purchase of the land as well as building of the home as discussed below.
Some mortgage lenders will offer construction...