HOW DO I FINANCE MY LOT & NEW HOME?
“Use a construction loan”
Castle Rock Builders have built Custom Homes in Maryland for many years, this longevity has enabled us to create relationships with some of the BEST Construction Lenders in the Maryland area. What makes a Construction Lender the BEST? Knowledge, experience and most importantly a lender’s construction programs make a Construction Lender the best. These relationships ensure that our customers will receive the most favorable loan terms pertaining to your construction loan.
FREQUENTLY ASKED QUESTION PERTAINING TO CONSTRUCTION LOANS IN MARYLAND
Q: “I don’t own a building lot in Maryland as of yet but I am looking. What’s the best way to go about the process of buying the lot & building the home when utilizing a construction loan? “
A: The best way to go about the process is utilizing what’s called a “one time close”. Once you have found your dream building lot (don’t put in a contract without Castle Rock Builders first providing a FREE Site Evaluation. The FREE Site Evaluation could literally save you thousands of dollars. You would then combine the land contract (lot) with the house contract (Castle Rock Builders) to provide the bank with the total amount needed to finance, minus whatever the bank is requiring for a down payment and closing costs.
Let me provide a simplified example:
$150,000 lot contract + $350,000 home contract = $500,000 total (Lot + Home).
You would then present the bank with both contracts and request a construction loan for $475,000 or $450,000 depending if the bank is going to require 5% ($25,000) or 10% down ($50,000).
In addition to the money down you will have closing costs as well.
Please consult with our preferred construction lender for complete details.
Q: “I already own a building lot in Maryland and I have substantial equity in my lot. Can I avoid the down payment needed for financing the house portion?”
A: YES! The construction lender will be able to use your lot equity (based on an appraisal / the amount of equity in the lot) towards your down payment. The construction lender will take the difference between the value of the lot, verses what you currently owe on the lot. This equity will go towards the loan to value of your construction loan.
Let me provide a simple example:
If the appraised value of your lot is determined to be $150,000 you would then be able to use a percentage (based on the equity amount in the lot) of this amount towards your down payment. Please consult with our preferred construction lender for more details.
Q: “What type of credit score do I need to secure a construction loan?”
A: There can be extenuating circumstances (large amount of cash down, co-signer, etc…) but in general a 680 credit score or better is needed to secure a construction loan. Please consult with our preferred construction lender for complete details.
Q: “Let’s say I have found the building lot of my dreams, but I have a home to sell, assuming I have equity in my current home, can I take the equity and use it to buy the lot, thus securing the building lot and not losing the lot to another potential buyer?”
A: YES! The construction lender will use 90% of the appraised value of your current home, based on your equity amount. This can be accomplished through a home equity loan or a bridge loan. Please consult with our preferred construction lender for more detail.
Q: “Do I have to finance a home or can I just finance part of the home?”
A: You can pay cash for the entire home or you can pay cash for a certain percentage of the home and finance the remainder.
Q: “My lot is going to require additional site work in order to build on it, can I roll the site work into the construction loan?”
A: YES! You can roll additional site work required, in order to build, into the construction loan. Fortunately, based historical fact, many Castle Rock Builder’s homes typically over appraise. This is important because when additional site work is rolled into the construction loan, the loan amount ultimately has to appraise.
DID YOU KNOW that when you use a construction loan ALL of the interest paid during the construction of your home is tax deductible? This can add up to thousands of dollars in tax savings!
DID YOU KNOW that depending on the equity in your current home, 100% financing may be available for the land purchase or the entire land + home package? This would allow you to purchase your dream lot before someone beats you to it and it may allow you to get started non-contingent on the whole process, while your current home is on the market!
DID YOU KNOW that you can obtain financing on the building lot with only 10% down? The building lot is the most important part of the equation. If you find a building lot that suits your needs and desires, it would behoove you to act on the lot even if you are not quite ready to build. An example – A $150,000 lot would require only $15,000 down (10%) plus any closing costs.
DID YOU KNOW that with flexible terms, highly competitive rates and “one time closings” that construction loans are the preferred choice for financing a Custom Home by thousands of New Home buyers in the Maryland? Construction financing is a solid, proven and simple loan program for financing a New Home.
WAIT THERE’S MORE!!!
Would you like to learn even more about the benefits of using a construction loan when building a Custom Home on your building lot / land in Baltimore County, Carroll County, Harford County, Anne Arundel County, Howard County or Frederick County Maryland?
Please call 410.864.0177 or EMAIL or TEXT today and we would be glad to put you in touch with our Maryland Construction Loans expert Bob Mowrey from First National Bank NMLS #139489 . You can also contact Bob Mowrey of FNB directly at 410.404.0095 or Email.
Robert Mowrey, of First National Bank, is a construction loan expert with many years of experience and can answer ANY and ALL of your questions pertaining to construction financing.
We build on your lot. Castle Rock Builders will build on your lot-land OR we will tear down / demo your old home and build a new home. If you plan to build a Custom Home in Baltimore County, Carroll County, Harford County, Anne Arundel County, Howard County or Frederick County MD on your lot-land we need to talk!
Please call 410.864.0177 or EMAIL or TEXT or visit our CONTACT page to discuss building a Maryland Custom Home, on your lot-land, in much greater detail.
