Even when economic conditions are calm and rates are reasonable, construction financing for a new home can be complicated. The large majority of lenders structure their loans the same way they always have, with little change. The “traditional” process is not only expensive, but offers those choosing to build little protection if rates or economic conditions change. In the best cases this just adds some stress during the time of construction, but in the worst cases, can add financial hurdles at the end. 

Choosing the right lender

To help our customers move forward with building, we’ve sought out a financing partner who can simplify the process, decrease the closing costs and offer protections against rising rates. Our partner, Truliant, out of Raleigh, structures their loans in a way that is different than any other lender we work with. This is a major reason why they continue to thrive, while other banks and brokers face tougher times. What’s different? Truliant offers a single-closing construction-to-permanent loan, with an 18-month rate lock. Making it even better, should rates be lower at the time your home’s construction finishes, they’ll even adjust your rate down. All other aspects remain standard, such as interest-only payments during construction and only on the amount disbursed at any given time. For Craftsman, Truliant has already financed several customer homes, and the process for the customer, as well as for us as the builder, could not have been easier. 

Traditional construction financing 

When financing new construction projects, the vast majority of banks and mortgage brokers do so by providing a loan for the construction phase and a separate mortgage afterwards. This means two sets of closing costs – one for the construction loan and one for the mortgage. It also means that you have no protection against rising rates or changing economic conditions, whether they be personal or on a macroeconomic level. This is because when your home nears completion and it’s time for your permanent mortgage, your lender will go through all the same steps as they did for your construction loan and set your interest rate at whatever the current rate is. This could mean new credit checks, supplying new tax and income information, as well as  submitting any other financial disclosures that are typically required. This all leads to increased costs, headaches and time.

Conclusion

Through the years at Craftsman, we have worked with just about every lender in the region. And regardless of who you choose, the majority offer outstanding service. But in these uncertain economic times, we’ve carefully selected a partner who we feel not only provides great service, but also has done everything in their power to make the financing side of building a new home as easy as possible for our customers.

For more info or to set up a free consultation, please reach out at 434-266-1070 or fill out the short form on our Contact Us page, and we’ll get in touch.

Additional Articles