Borrowing money to buy a custom built home is actually pretty straight forward.
To build a custom built home on your land, you will need a Construction Loan and Permanent Mortgage.
Construction Loan: This is simply a loan where your lender sets up a set amount of money for you to draw from as your home is built. Griffith Homebuilders will build your home and require payments as the home is built. These payments are tied to the construction progress of the home: Down Payment, Basement Walls, Home Set, and Final Completion. The amount of the payments are set in advance in the Construction Agreement. The home owner pays interest on the money only after it is drawn and paid to Griffith Homebuilders.
Permanent Mortgage: This is the “traditional” mortgage that the home owner has. The payment plan is often based on a 30 year mortgage. When construction is complete, the home owner is satisfied with everything, and the final payment from the Construction Loan has been made, your lender will convert the Construction Loan to a Permanent Mortgage and set up monthly payments.
It is important that you find a lender that you are comfortable with. They should explain the process and costs involved. Not all lenders do Construction Loans. Some lenders offer them, but lack experience with them. We strongly suggest that you ask them how many Construction Loans they have done in the past 12 months. Do not make a lender’s inexperience become your problem!
Griffith Homebuilders can refer you to several great lenders that our customers have had good experiences with in the past.