If you are contemplating building a new home instead of buying a resale, it is useful to learn about the financing options available. Financing new homes is much different than purchasing an older property. The terms, interest rates, and processing can differ. Below are a few different new home financing options in Florida.
Construction loans are temporary alternatives designed to dispense necessary money throughout the building process. There is typically a schedule for when funds are released and in particular amounts. Specific goals must be accomplished at each phase. The costs, interest charges, and other terms will vary by lender. Construction loans are treated as high risk, therefore requirements are often more strict than other home mortgages. Upon conclusion of the construction period, a new mortgage must take over.
Construction to Permanent Loans
Construction to permanent loans require only one closing. While the home is being constructed, interest-only payments are commonly required. Once construction is over, the mortgage turns into a typical loan with regular monthly payments. Interest rates are typically determined at the beginning, but the rate lock for the permanent portion of the loan may have an expiration. If your house is delayed, then your rate may change for the permanent loan.
Builder Financed for New Home
Builder financing is the most ideal option for buyers because no additional loan is required by the home buyer. Home buyers are normally required to give a significant deposit and to cover the cost of upgrades ahead of time. Buyers must have a loan at closing.
New Home Financing Options In Florida
Financing options on the market may be based on who owns the lot or the builder does. Buyer-owned lots ordinarily need a construction loan of some type. Builder financing is usually offered within new subdivisions. Alternatives may also vary by mortgage company as some maintain unusual alternatives. Contact your lender to learn all of the different new home financing options in Florida and if you qualify.