How Much Home Can You Afford?

• Unless you are able to pay cash to build your home, it is wise to seek help from a trusted loan officer who can assist you with a construction loan. Call and schedule an appointment to discuss particulars of your finances with this trusted loan officer who will walk you through prequalification for a loan based on your countable income. That figure will help you to know how much you can afford to build. If you own your land, it may contain enough equity to cover down payment and closing costs. Find out what the land is valued at by having a Realtor do a "sold search" on their multiple listing service, or speak with an appraiser.
  
  

How Good Does My Credit Need to Be?

• When you speak with your loan officer, one of the things that will be brought up will be credit and scores.
  In today's market, construction lending is requiring higher scores that ever before. Ask your loan agent to check the requirement for scores to see what is required. Have the agent pull your credit to see where you are early on so you can seek help to work on paying down credit cards or whatever else may need work to increase scores so your loan request can be approved.
  
  

Owner Building Vs. General Contracting

• Since the mortgage meltdown, there are limited lenders that offer "do it yourself" construction loans. If you were planning to build the home yourself, you may need to rethink the process, and be open to hiring a general contractor. If this is the case, get references from your chosen contractor. Get him to give you a cost breakdown on the size and style of home that you have chosen that fits within your budget as given to you by the loan agent. Make sure this cost analysis includes permits and all aspects of getting the property ready to begin construction. There will be additional costs that may not be mentioned in his cost analysis, such as an appraisal on the property and blueprints. Your contractor can assist you with the costs of blueprints by referring you to his own source, and the loan agent can give you an idea of appraisal fees. If you are happy with what you find out about your building contractor, go forward with a contract. The builder will prepare it as a proposal to you. Have a real estate attorney look over the contract and make suggestions of any changes before you sign.