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Home Loan for New Construction

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YOU HAVE A PLAN, a plot of land in sight, Togo Custom Home’s in mind to build and a design in mind…but how do you pay for it?

A home loan for new construction covers the cost of building a new home, splitting payment from the bank to the contractor as certain milestones are made. Loans like these typically lasts for 12 months and then must be paid off or converted to a standard mortgage.

Similar to the standard mortgage process, getting a home construction loan includes the normal underwriting of your loan application and adds a thorough vetting of the home builder.

Construction Loans … How They Work

There are several construction loan option out there, however the two most common, construction-to-permanent loans and standalone construction loans, is what we will focus on today.

Construction-to-permanent Loans, automatically converts to a standard mortgage when the construction is finished. The lender may call this conversion a modification or refinance. The benefits is that the borrower does not have to go through the loan application process all over again, saving time, hassle and monies on a second closing.

Payment on a constuction-to-permanent loan tends to be a little higher than a standard mortgage because during construction the borrower typically pays interest only. It is not until construction is over that the loan is then converted to a standard mortgage and payments are reworked based on the length of time for term of loan.

Standalone construction loans. This is a short-term loan that funds a home construction project that stands on its own. There is no permanent financing upon completion of the project, therefore you do not have financing to live in the home afterwards. You will have to apply for a mortgage for the permanent financing.

One advantage of getting a standalone construction loan is that you will have time to shop for the best terms for the permanent mortgage prior to completion of the new home. A disadvantage already mentioned is that you will have additional paperwork and costs incurred for closings if you decide to go this route.

What You Will Need to Qualify for a Home Construction Loan

Qualifying for a home construction loan your income, debts and credit history will be analyzed. Your loan underwriter will walk you through everything you need by giving you an application and answering any questions you may have in the process.

Prior to contacting your loan underwriter begin to gather the following information which will help you get a head of the game:

  • Proof of identity
  • Recent pay stubs
  • Proof of other income, such as alimony, child support, self-employment, Social Security or disability
  • Recent tax returns
  • Recent bank statements
  • Recent statements for other assets such as brokerage or retirement accounts
  • List of your debts with minimum monthly payments
  • Other liabilities, such as alimony or child support payments
  • Source of down payment
  • Current rent or mortgage payments
  • Profit-and-loss report if self-employed

The Importance of Home Inspections

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What is a home inspection?
A home inspection is an objective visual examination of the physical structure and systems of a house, from the roof to the foundation. Home inspections are conducted by a home inspector who has the training and certifications to perform such inspections.

The standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system; interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.


Does everyone need a home inspection?
Since buying a home is usually the largest single investment you will ever make then yes a home inspection is necessary to minimize unpleasant surprises and unexpected difficulties. A home inspection may just identify major repairs or builder oversights that can be addressed or help you walk away from a buying a deal that isn’t a deal!

On the flip-side if you are planning on selling your home, a home inspection if passed can give you great leverage in assuring the buyer that everything is good. If failed, the inspection can give you the opportunity to make the needed repairs which can be done to put put your house in a better selling condition.


What will it cost?
The inspection fee for a typical one-family house varies geographically, as does the cost of housing. The average home inspection costs around $315, with condos and small homes under 1,000 sq ft. costing as little as $200. Larger homes over 2,000 sq ft. will run $400 or more. Radon or mold testing will cost extra, but will typically cost less if you purchase them with a home inspection.

IN SUMMARY
Home inspections are a sensible way to assure yourself as a buyer or seller that you are getting or receiving what you pay for. Although there are costs involved home inspections are very important and should always be done.

The Finishing Touches – Vinyl Siding or Brick?

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Deciding between vinyl siding and brick isn’t really just based on cost. What you need to do is look at the costs, durability and the numerous design options that you are truly looking for, consider these options and the length of time you will be staying in your home, the real estate market and then decide from there. Why is this so important? It is because too many homeowners either over spend when building a home that they don’t plan on living in for more than 5-10 years and others underspend by choosing vinyl on a home that they will only spend 5 years living in and expecting a larger return on the resell.

So what are you to do? What should be your focus? Your focus should be on the length of time you are planning to stay in your home and what dollar value the real estate market will hold for your home. Keeping these two items in mind you’ll be able to take a look at your budget, seeing what you can spend and how best to invest your hard earned money.

THE DIFFERENCE

Vinyl siding is plastic exterior siding for houses and small apartment buildings, used for decoration and weatherproofing, imitating wood clapboard, board and batten or shakes. It is an engineered product, manufactured primarily from polyvinyl chloride (PVC) resin.

Brick is simply a small rectangular block typically made of fired or sun-dried clay, used in building. Brick combines perfectly with passive building design to harness natural sources of energy, creating an energy efficient warmth in winter and cool in summer. Brick home exteriors are more expensive than siding, yet since bricks are porous, problems with drainage and mold may arise if the home is not maintained. With an adequate drainage system, a brick exterior offers more overall advantages than other home exterior options.

STANDING THE TEST OF TIME

When you are looking for longevity you will want to Brick is your best solution. As mentioned the resell value of your home will be putting more in your pocket while not having and maintenance issues. Vinyl siding unfortunately can also adversely affect the long-term value. Continue reading to learn about the differences of brick vs. vinyl siding and to find out why brick adds timeless beauty and value to any space.

Along with longevity you should also focus on durability, Vinyl siding typically has a warranty of 25-50 years after installed. When compared to brick, vinyl siding is more susceptible to impact damage from hail, tree limbs and other objects creating scratches, dents and more. Brick on the other hand is extremely durable. In fact, brick masonry can last 100 years when installed properly. Brick is made from natural materials, which results in better health, comfort and well-being for homeowners.

CARE

There are a few things you have to keep in mind when deciding upon your exterior look of your home. If leaning to vinyl siding you’ll need to set time aside each year because you will need to wash your vinyl siding annually. You will also need to replace any sections that get damaged, noting that not all siding colors match year after year. You could still choose a higher quality siding but you will still have some weathering issues, whereas brick is maintenance-free.

One of the other culprits that shoot down siding besides the maintenance, bending, cracking, breaking and becoming very brittle in severely cold conditions would be heat! Yes, heat is the greatest enemy of vinyl siding. In fact, studies show that vinyl cladding may ignite as a result of a fire inside an adjacent dwelling only six feet away.

Brick is fire-resistant, impact-resistant from wind-borne debris, and provides excellent resistance to sound transmission, all on a scale superior to that of vinyl siding.

ENERGY EFFICIENCY & SUSTAINABILITY

Brick has a natural ability to absorb, retain and release heat when temperatures rise and fall, resulting in less energy required to heat and cool homes.

Thermal mass is the ability of a material to store heat and then slowly release it. For homeowners, this means that during the summer months, a brick home stays cool during the hottest part of the day. During the winter, brick walls store heat and radiate it back. Vinyl, aluminum and wood are all thin, light building materials that do not have good thermal mass properties.

Sustainability is a key feature of genuine clay brick which is a green building material made. This products are commonly used in new construction for an authentic look and feel.

Unfortunately, vinyl siding is not an environmentally friendly option. The primary component of most vinyl siding is polyvinyl chloride (PVC), a derivative of petroleum and salt. Environmental concerns about the use of products made with PVC primarily focus on two materials: chlorine, used as a raw material in PVC production, and dioxin, a toxic by-product of manufacturing processes involving chlorine.

THE BOTTOMLINE

When comparing brick to vinyl siding, brick is ultimate winner! If you are seeking curb appeal, durability, low maintenance and high value brick should be your choice. If you are simply wanting to save upfront costs, don’t mind regular maintenance and repairs and you aren’t looking for extra added value on the resell consider vinyl siding.

The Right Kitchen Renovations to Increase Your Homes Value

Kitchens are one of the main selling features of a home. This is where all the action happens and family and friends join in for great meals, talks, fun and more! This is exactly why choosing the right kind of kitchen upgrades during a renovation or new build is key!   

Why Residential Solar Panels Are Great Choice

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If you’re looking for a home upgrade that can add resale value to your home while paying itself off over time, look no further than a solar panel setup. In the past few years, the cost of installing residential solar has declined while the efficiency of the panels has increased. This combination has made home solar one of the best investments that a homeowner can make – provided they live in an area that receives a good deal of sunshine.

DIY Outdoor Sofa

This DIY sofa is gorgeous!  Shoutout to HomeMadeModern  who featured this lovely project! They made this sofa with basic power tools and did it just under 5 hours. Couch was made with 4x8s, 2x8s, and some outdoor sofa cushions which they bought from their local outlet store. Made from solid wood with a grey Minwax wood stain finish this piece will fit any outdoor patio! Give it a shot today and click the link above to watch the complete project from start to finish.  Good luck.

The Best Way to Find the Right Home Builder and House Plan for Your New Home Build

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We’ve been asked on several occasions what’s the best way to find the right house plan for our needs? What an excellent question! From our experience and expertise over the last 30+ years we’ve got some key points to help you narrow down what you actually need to focus on for picking a successful house plan and creating that perfect new home build.  

To Buy and Renovate an Existing Home or To Build….What’s Your Vision

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To renovate or to build is a burning question for most people looking to make the right investment move for their future. This question really comes down to where you currently are in life and where you want to be.  Some people are seeing their money going out the door by renting and this is exactly what will happen, but if you do some soul-searching about what your true life goals are map out your vision you will easily come to a definitive answer as to which way you should go.

We all know a home is the single largest investment that a person makes.  Location, price, market trends, property specifics and the condition of the property are all factors to consider when deciding to dump more money into the home you own or when buying one on the market to renovate. In this case you will not only have to be practical and realistic as to your end-goal keeping in mind to think like an end-buyer and plan to upgrade to a market-friendly, breathtaking finished product that will last for years to come. Weighing all the costs and all of the soon to be future replacements that you may incur while you are still in the home like possibly a new roof, water tank or upgrade to air conditioning on the furnace…etc. compare these costs to a new build that will have essentially no headaches for years to come.

Yes, this seems a little overwhelming but let us help you break this down a little further so you can make an educated decision:

Custom Homes by Togo

Here at Togo Custom Homes you will only get top-notch, exceptional quality craftsmanship!  Our homes are tailor made to suit your needs, lifestyle and the area in which you find your lot.  One of the most important things in Custom Home Building is planning.  Without proper planning execution will not go well. You will be frustrated and you will waste a lot of money.  So do your due diligence when you are looking for a Home Builder. If we happen to service your area don't hesitate to give us a call and learn more about our services. You will be extremely pleased with our process and the finished product, guaranteed!
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