Financing A New Construction Home

When building a New Home, there are many things that you will become familiar with and easily get a feel for;
How big of a home do we want? What style of home do we want? Where do we want to live?
But something you may not be familiar with is how to Finance a New Home.

Most people are familiar with a Traditional Mortgage, and the relative simplicity involved.
When building a new home, Banks will use a Construction Loan which is just as easy to understand.
A Construction Loan is the most common form of financing for the construction of your New Home,
and it can be explained in a few short steps.

Application:
You make application for a Construction Loan with a bank of your choosing. At the time of application,
you will lock in the rate that will be used for your construction loan, and subsequent conventional mortgage.
The applicaiton process will require a Signed Contract with Barrington Homes to build your home, as well as an
Agreement on the Lot of your choosing. The entire application process will take approximately 30-45 days on average.

Draw Schedule:
Every bank will use some form of draw schedule to manage the payout of your mortgage.
Once a phase of your home is completed, the bank will inspect the completion of that phase,
and with your approval, release payment for the work that has been completed so far.

Construction:
Upon closing of your loan, we will be notified by your bank that we may begin construction of your home.
The downpayment money that you used for your loan will be applied to the purchase of your lot.
Once your downpayment funds have been used, the bank will start to use your mortgage to make payments
in accordance with your Draw Schedule.

Throughout the course of construction, you will be making Interest Only payments, that will grow as your
home grows. Once your home is completed, your construction loan will roll right into a conventional mortgage.

If you have any questions regarding Construction Financing, please contact Barrington Homes.
We can put you in touch with many financing professionals that can help you better understand the process.