What’s the Difference between a New Home and a Custom Home?
If you’re in the market for a new house, you’ve probably seen a fair share of newly finished homes as well as empty lots. There are many attractive, new communities in the area boasting gorgeous turnkey homes. At the same time, undeveloped land in the area may be vacant, awaiting a custom built home. As you drive through desirable areas, it’s likely you flip-flop between wanting a finished home and the empty lot next door. After all, both have for sale signs. Advantages of New Homes New homes offer buyers many benefits. Perhaps the greatest advantage is being sold completely finished allowing for a quick closing process. Many buyers want to close in 60-90 days, and this is very possible with an existing home. The downside with this option is there’s no opportunity to customize. Additionally, there are more marketing costs and fees accrued by the builder, which translates into increased costs for the buyer. It’s also recommended that buyers of a new home be represented by a real estate agent. Advantages of Custom Homes The primary advantage of building a custom home is that it can be built to individual specifications. Everything from style and design to cabinetry, hardware and fixtures, windows to countertops, is customizable. Custom homes are designed with the specific vision of the buyer in mind, and plans can be altered as the process progresses. The buyer has control and freedom. It’s a win-win for all parties: the buyer benefits from unlimited choices, and the builder benefits from already having a buyer. However, because it’s built from scratch, a custom home will take longer to complete. Is a custom home too good to be true? The myth is that custom homes are too good to be true, even a bit out of reach. However, it’s entirely possible to have a custom built home within your budget. There are three keys to making it happen: 1. Purchase your land 2. Hire a builder 3. Owner Financing If you’re considering this option, it’s important to work with a home builder who guides the process. This means developing a custom plan for you, but also ensuring it meets your needs and budget. To learn more about our hands-on approach to designing your dream home, contact Highland Builders...
read moreHow to Choose Between Construction-Permanent Financing and Builder Financing
Building your dream home is an exciting venture. From choosing land, to drafting blueprints and designing floor plans, there are many important decisions to make with your home builder. Financing is one of the more complex aspects of building a custom home. Navigating the process of traditional home loans can be complicated, but construction loans present a higher level of complexity. You’ve probably already looked into owner financing, and it’s possible your builder has given you information on their own financing options. Construction-permanent financing and builder financing are the two main types of loans buyers of a custom home must consider. Construction-permanent financing, or owner financing, provides short-term fund disbursement throughout the stages of construction. This type of loan is underwritten to last the duration it takes to build the home. Owner financing works by giving buyers an initial line of credit and an installment schedule for loan draws. For example, the first draw, say 15% of the total loan, is allotted for lot preparation and foundation work. Next, 20% may be drawn for framing. Additional draws follow over the remaining months. Between each draw, the lender inspects the site for progress and compliance with building codes before more credit is withdrawn. Once the home is finished the construction loan becomes the permanent loan. The other option is builder financing. Essentially, this is borrowing directly through the home builder’s lender either from their own mortgage subsidiary or affiliate relationships with outside mortgage companies. The builder carries the loan through construction, and once the home is complete, the buyer obtains end loan financing. These packages often seem appealing to homeowners because the builder’s involvement on the financial side is reassuring. The builder doesn’t have to wait for the buyer’s lender to disperse funds and conduct inspections. Builder financing may reduce the time needed to proceed through loan stages. Both options are practical ways to fund the construction of your new custom home. However, in most cases, construction-permanent financing is less expensive, more convenient and a better solution for the homeowner. Here are some of the benefits of obtaining a construction-permanent loan: During the loan application process, the buyer has greater opportunity to lock in a lower interest rate. Closing on a construction-permanent loan is faster and less stressful because there is only one closing required. Construction-permanent is a packaged deal—land, construction and mortgage— combined into a single loan. Offers the potential for an interest-only payment structure during construction. Highland Builders has you covered in all aspects of building your dream home. Whether you’re interested in builder financing options, or have already obtained owner financing, our experienced designers, architects and contractors are anxious to bring your vision to life. For more information on building custom homes, contact Highland Builders...
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