You may choose to arrange for your own construction and conventional mortgage financing. If so, we will be happy to provide your bank with any information they need. Or, like many we have helped in the past, we can help you with this. Lenders we work with offer very competitive interest rates and closing costs.
Below we have provided general information about the home financing process. Please keep in mind that not all lenders offer all programs and many have their own special requirements for financing.
LAND PURCHASE & PAYOFF
All or some of the purchase price for land or a building lot may be included in your construction and permanent mortgage financing. If you do not own land yet, it is a good idea to pre-qualify to help you budget for your land purchase. If you already own land, any equity you have may be used towards your down payment and the land loan balance must be paid off at the construction loan closing if the equity can be supported by the lender's appraisal. If there is an existing mortgage on the land, special arrangements will have to be made to have it paid out in full prior to commencement of construction. As every lender is different, we are happy to discuss with them directly.
Down Payments may be made with your own funds, equity in your land (provided the lender's appraisal supports it) or a gift from a relative. Many RRSP plans allow you to borrow the down payment for a home. Conventional and Construction Draw Mortgages typically require from 20% to 25% of the total cost to build down prior to start of construction. The down payment amount varies depending on your creditworthiness and the availability of Private Mortgage Insurance. A large portion of the down payment is collected by the builder in trust and will be used to get your project started and to the first draw.
CONSTRUCTION & DRAW MORTGAGE LOANS
If you do not have the funds (or do not wish to use your funds) to build your home a Construction Loan will be required to help pay for costs during construction. Borrowers will need a separate Construction Loan which will be used to pay the builder at various stages of your home build. Upon construction completion, there will be a final draw payment that is paid to the builder. This is also when your mortgage lender will convert the mortgage into a conventional mortgage. We work with many Construction and Conventional mortgage lenders and will be happy to assist you in obtaining a low-cost construction loan.
CLOSING COSTS AND CONSTRUCTION LOAN INTEREST
Its important to budget for closing costs. These typically include the cost of property taxes, draw mortgage fees & interest, inspection fees, legal fee’s, registration fees, and survey fees.
LENDERS OUR CUSTOMERS HAVE USED:
METRO MORTGAGE GROUP