HOW TO BUILD A HOME WITHOUT A CONSTRUCTION LOAN

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Who wants to deal with 2 loans?!?!?! 2 appraisals ?!?! 2 sets of closing costs?!?!?

Is the overwhelm of financing stopping you from building your dream home? You are not alone. This is one of the biggest reasons many people don’t build.

Traditional Home-Build Loans

The typical custom home build requires two loans. The first loan is the “Construction Loan” and the second is the “Permanent Loan.”

1. The Construction Loan

When building a house, a construction loan is typically obtained through a conventional lender (a bank). Construction loans typically require 20–25% cash or equity from you, the borrower. The lot equity (difference between the lot value and the lot loan) counts toward the 20–25%.

Construction loans are most commonly for one year and cost 1–3% more than the “Permanent Loan.” Borrowers pay interest only during the construction process. Construction Loan lenders require a written commitment from the Permanent Loan lender before the loan is issued to ensure you’ll have the funds to pay off the construction loan.

2. The Final “Permanent Loan” or Mortgage

This loan is the type you would obtain on any home. These loans are typically 15–30 years amortized so that the loan is paid off at the end of the term. Down payment requirements vary from 100% USDA loan to 20% down on a conventional loan. In between, there are loan products like the 3–5% down FHA loans and many others. Your local mortgage broker will help determine your final mortgage type.

When you build a new home, you have to secure both types of loans and go through the underwriting process twice, which is costly and time-consuming. But there is another way!

CMS Homes Does Not Require a Construction Loan

CMS Homes offers a one-loan process to our custom home-building customers. If you and the property meet certain criteria, you only have to go through the final or permanent loan process, just as if you were to buy a move-in ready home. You close the loan when you receive the keys to your new home. It’s as easy as that!

Participating in our “Easy Build” Program  requires the following:

• 10% down or 10% of the total purchase price in lot or land equity (value of land minus loan balance).
• Deeding lot title to CMS Homes (if it’s in one of our communities, this isn’t necessary).
• Satisfactory pre-construction appraisal of lot and house.
• Pre-approval of final mortgage amount from lender.

Learn How to Utilize Our Easy Build Program in Lincoln County, MO

Of course, to learn more and take advantage of this one-of-a-kind program in St. Charles County, Lincoln County, Warren County, or anywhere within a 35-mile radius of these Missouri counties, contact us today.

Easy build program has contingencies and may have additional requirements based upon the lender’s requirements.