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Please excuse my ignorance, I have been renting for the last 16 years and we are now looking to buy a new construction house somewhere in the Triangle.
I have seen on here by posters that many of the local custom builders here don't have financing. What does that mean? I thought you can just get a loan from the bank or wherever for the house, since the builder usually owns parcels of land that they build on. I am not looking to buy my own land and bring a builder onto it -this requires a construction loan ---> permanent loan, correct?
I am just asking, because I have thought about looking into Wardson Builders, Jordanbuilt, Rice, etc in addition to looking at the big people like Drees, ForeverHome, Pulte, etc. Since Wardson, Jordanbuilt, etc are local builders, what kind of financing are we talking about -not just a regular loan from a bank? (Although Jordanbuilt has a financing section on their website but no information). Wardson also has land that you pick to build on, so how is this any different from Pulte and the others? Our price range is around 600k, so that's I have been looking into local builders in addition to the other national ones.
The custom builders you mentioned usually require you to get a construction loan unless you are buying one of their spec homes. They will also require a deposit before they start. They typically dont have the money to fund an entire house.
The national builders have their own mortgage companies most of the time so they can fund their own loans. They dont require as much of a down payment but you are limited in your options and upgrades. The custom builders will put a pool on your roof if you want to pay for it.
Thanks for your help. If we buy a spec home, is it the same as the other builders on getting a loan and paying for it?
Yes. Exact same.
And for a construction loan + deposit, what percentage are we talking about for those builders, if it's not a spec home?
They usually require $5k up front and/or 10% at closing on the loan.
I'm assuming these local builders all require a 20% down payment, or is it higher than that?
The lender will probably require 20% on a construction to perm because there is more risk than you buying a spec home. The builders will not require 20%. The amount really depends on the price of the home.
Last I checked, Wardson was 10% down and preapproved loan for purchase. They did their own financing. Also, half payment for all upgrades/changes from what they'd typically put in a spec of the same plan (assuming you go with some variant of one of the plans they regularly build). This is on lots they own. Not sure about what they'd want on a lot that wasn't theirs.
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While the local builders may have needed to have their clients get the construction financing for several years, if they are doing it now it's because of choice.
There are a couple of local banks that will do a construction/perm for you as a Buyer. You might want to check into that as well, to compare the financing costs to having the builder do it all.
While the local builders may have needed to have their clients get the construction financing for several years, if they are doing it now it's because of choice.
There are a couple of local banks that will do a construction/perm for you as a Buyer. You might want to check into that as well, to compare the financing costs to having the builder do it all.
Agreed, Bo.
That said? I'd prefer a builder that CAN do their own financing. Ones that cannot leave me feeling like they're not solid companies.
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That said? I'd prefer a builder that CAN do their own financing. Ones that cannot leave me feeling like they're not solid companies.
it just depends on how "custom" the house is. if you get the loan and bail on the house the builder isnt out any money. if they have a specific floor plan that will work with the neighborhood and that they know will sell if you bail its another story/.
it just depends on how "custom" the house is. if you get the loan and bail on the house the builder isnt out any money. if they have a specific floor plan that will work with the neighborhood and that they know will sell if you bail its another story/.
Of course. What I meant was I'd feel more confident with a builder who is capable of financing construction.
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I can add some notes to also check for. I hired a local contractor to help line up subs. Being a former contractor myself, I know that private builders got pushed to the bottom of the list. I even called companies that were in the parade of homes to find a builder. Well, it didn't matter. The contractor needed me to get the loan, since he didn't have enough to back it up. When I was a contractor, I took care of all that. And when the house was done, we signed the papers with the owner and gave them the keys - done!
But Between waiting for the bank to approve about 10+ stages different of the house, waiting on Cary to inspect and the contractor to get subs on site. It seemed to take forever to complete the house.
Another note was when I went to some of these companies I had an early design of the home I wanted. But to many of these companies, custom home meant picking 1 of 4 provided designs. Not your own.
I would recommend to find a builder that will take care of the bank side. All you do is pay for it at the end.
Also, watch for run overs. And if you can help it, don't change anything while building. I know of many contractors that would charge 3 to 4x more for changes. Because when the owner is standing in a framed up house with no sheet rock, the rooms appear to be small when you can see though the entire house. even if the room is huge. Trust your design and don't change it!
Good luck!
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