What's the 1st step to home loan financing?

So you've decided to build a new home.  Now what?  Well one critical step is to find a lender and begin the loan process. The pre-qualification is the first step to obtaining a new home loan, the pre-qualification is preceded by a ‘pre-approval letter’ which will be beneficial for you to understand your buying power.  

"A pre-qualification is extremely important, as it allows not only you the customer, but also your builder know what you can afford," says Jackie Portz, an AVP Senior Mortgage Loan Officer with Associated Bank.  "Your lender can suggest many different options and financial advice to make sure you are in the best loan product for you and your family."  

Now one of the next questions is what type of loan.  Most builders require and only do construction loans that may require a 20% down payment and draws throughout the building process.  However, Harbor Homes is one company that does not require their customers to use construction loans when building.  They offer “Turn-Key” financing, where the builder carries the financing upfront which requires only 5% down towards your new home.  The easiest way to think about a turn-key financing is similar to purchasing a used home.  You put money down and when you close on the home, you close on the loan.

There are a number of advantages to turn-key financing.  First, it’s simple, there is no monthly payments throughout the building of your new home like a construction loan with draw payments, the closing costs are less money and the process is much quicker.  With turn-key financing the builder handles everything upfront. You will simply work to secure financing for the closing on your home, and that 5% you put down with the builder will go towards your loan down payment.   

Harbor Homes wants you to feel comfortable with the final sales price of your new home so having a conversation with your lender early in the process are important to your peace of mind.  It pays to take the time to do your own research, talk to several lenders, and make a final decision that will make you comfortable. We have excellent relationships with local lenders, and can certainly recommend ones that can best assist you as you get started.