Obtain Construction Financing
The first question to ask is will you or your builder be financing your construction project? There are pros and cons to both approaches, but it is safe to say that whoever owns the property during construction will be the person providing the construction financing, as construction lenders will lend only to the property owner.
If you finance it, you will be able to lock in a long term interest rate now vs. doing so at the time your home is finished. On the downside: 1) you will need up to 20% down, 2) you will be required to make monthly interest only payments on the amount drawn to date, and 3) you may become liable in the unlikely event an accident occurs on your property during construction.
If your builder finances your project, he will include the cost of financing within the cost of your home as financing costs are a raw material to your builder, much like concrete, lumber or windows. Along a number of advantages, having your builder finance the project will reduce your liability during construction in the unlikely event an accident occurs.
Touch base with us as you contemplate your new home. We will be happy to share more details around the pros and cons of each alternative. If you decide to finance your project yourself, we can introduce you to experienced lenders that specialize in construction loans.