New Construction Lending
Yes, banks are still lending money for new construction. The interest rates are now at historic lows which makes building a new home even more affordable. We created this page to help answer some of our most frequent questions.
Does Old World Classics have a preferred lender?
Yes and No. We will use any lender you choose however our clients have found that these banks are offering them the best rates and specialize in New Construction loans.
|Christopher M. Seeley
Assistant Vice President/Mortgage Loan Officer
NMLS # 510214
Premier Bank & Trust
600 South Main Street
North Canton, OH 44720
Certified Mortgage Planner
Pointe View Professional Park
4831 Darrow Rd, Suite 106
Stow, OH 44224
Mortgage Loan Officer
NMLS ID: 297964
How much downpayment do I have to put down?
The downpayment size is going to depend on several factors including the location of the home, price of the home, your credit history, and appraisal. For a conventional 30 year loan up to $417,000 the downpayment can range from 5% to 20%. The majority of our clients put between 5% and 10%.We have also been accepted into the FHA program which can have downpayments as low as 3.5%. To get a better idea it is best to contact a loan officer and they should quickly be able to tell you what to expect.
How does a construction loan work?
A construction loan typically is an interest only loan during the construction period that will convert into a fixed mortgage at the completion of construction. The bank will disburse progress payments to the builder during construction and you will make interest only payments on the amount of money that is disbursed.
Can I buy my lot with a construction loan?
Yes. Your construction loan can fund the purchase of your lot and the construction of the home. This is generally less expensive than obtaining a lot loan and then a construction loan, because you will be paying closing costs twice.
Can my lot equity be used as part of my downpayment?
Sometimes Yes. Generally you must own your lot for more than a year to use its equity as part of your downpayment.
Why does my loan amount have to be under $417,000?
Most banks resell your loan to a government entity such as Fannie Mae. The government has set guidelines for what standards a loan must meet in order for them to buy it and one of those standards is that the loan amount cannot exceed $417,000. You can get a loan for over $417,000 however it must be resold on the private market, therefore the interest rate and downpayment are going to be higher.
How do appraisals work?
In order for the bank to fund your loan they will do an appraisal from the blueprints and specification sheets we provide them. The appraisers main consideration will be the location of where you are building and sales within the last 6 months in that area. The biggest key to consider is that you are building a home of less or equal value to the homes within a one mile radius.
I hope these answered some of your basic questions, but I’m sure you still have more. I would highly suggest taking a few minutes to contact one of our preferred lenders to give you a more complete picture on new construction lending.