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pre-construction mortgages?

ok so we figured out that we can afford a house around 200k, but now theres a new twist! buying a house preconstruction!

we've been able to find our dream house, actually several different kinds for the price we want but they aren't built yet. once again we have no money to put down, but do qualify for 100% because I am a firefighter. so here is the new set of questions?

-What are the major differences in getting a preconstruction mortgage?
-Are there better fixed rates available for preconstruction?
-do I have to start paying now, or can I pay when I move in.

ultimately I would like to buy this house now and move in in 6-8 months, but I can't afford a mortgage payment and rent. thanks for the help.

helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Neko,

Welcome back.

Unlike a traditional mortgage, construction loans are short terms loan mostly offered at variable rates of interest based upon the prime Rate. But there are fixed rate programs also. You need to sit with the contractor and the lender and decide upon the withdrawal of the borrowed amount and the interest charged on the amount disbursed.

The construction loans are such that they can be converted to permanent loan or else they may be replaced by a traditional mortgage. The loan can be converted into a long term mortgage only after the certificate of occupancy is provided to you.

The best thing about this loan is that there will be only one application and one closing. Depending upon your interest rate, you may even qualify for a rate lock valid till the construction is over.

Regarding payments, you will have to pay interest during the construction phase at the end of which you will require paying off the principal if your loan isn't converted to permanent financing or you don't replace your loan with a permanent one.

Thanks

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:03 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

As much as i have heard, one should start paying off the loan during the construction period itself and not after moving in.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:03 | Post subject:

silentneko's picture
silentneko | Joined: January 2, 2007 05:03 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

the homes we are looking at are in big communities where they are building hundreds at a time, do these style homes still require construction loans or are there other programs available?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:03 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You should contact lenders about the availability of such loan for the community you are looking to get your property in, as these loans are available as per my knowledge and many reputed lending companies offer them. From what I have read from your post, such a loan will be quite suitable in your situation as for the term of the construction period you will only have to pay interest.

Davos Burton

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:03 | Post subject:

helping_user's picture
helping_user | Joined: March 31, 2006 03:39 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Neko,

Hope you don't mind if i call you by that name. :)

Well, if you are looking towards getting loan for construction, then a construction loan will be a good option. What you can do is talk to some lenders and give them a description of the type of property you are looking to build. They will be able to tell you exactly whether they actually finance such properties.

Thanks.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:03 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Neko,

If I understand you correctly, you want to purchase a pre-construction home from a big developer. You're not interested in a construction loan for yourself to build your own house, right?

In these situations, you simply sign a purchase contract which obliges you to purchase the home when it's completed. At which time you obtain a mortgage or mortgage commitment.

Now most of these builders will require you to put a deposit down when you sign the contract. How much, if anything, depends on the builder.

Hope that helps,

[color=white:66bf2a390a].[/color:66bf2a390a]Chris Sanders
[color=white:66bf2a390a].[/color:66bf2a390a]csanders@concordloans.com

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:03 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Chris,

Welcome to the forums.

May be Silentneko wants to buy a pre-construction home but then he has also enquired about pre-construcution and construction loans. However, he has already applied for a home loan as is evident from his later posts and I guess he no longer requires a construction loan.

Thanks,

Sara

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