If you are thinking about new construction, I advise my clients to take advantage of available lot financing programs with small down payments because they will need cash reserves to qualify and to fund a home building project. Frequently, borrowers spend all their savings on their land, plans and permits, leaving themselves cash poor. Another issue is that if you have spent a significant portion of your reserves on lot acquisition, the loan may be more difficult to make due to a lack of liquidity. I should get my lot, plans and builder before I start worrying about the construction financing. Unless you are going to build your project entirely from your own savings, you will rely on funds from a lender.
Many consumers plan their whole project before consulting a construction lender.
They invest years of time and thousands of dollars, only to discover they made vital mistakes along the way, restricting the financing of their project or stopping it altogether. I will help tailor your financial picture to meet current construction lending guidelines, ensuring your qualification for the best and most appropriate construction and permanent loan program. I should buy my lot, then decide what to build. One of the major factors in current construction lending guidelines is the appraised value of the finished property. The appraiser evaluates the property for market value and conformity with houses in the neighborhood.