09 Aug Should you find your own financing or consider a builder whose price contains all building costs and financing?
Should you find your own financing or consider a
builder whose price contains all building costs and financing?
There are two very different opinions by builders in this regard.
First is the small builder who wants the buyer to finance the construction and cover all those expenses. The builder can say it is in your best interest, but in most cases the facts speak otherwise. The best case scenario is to find a construction loan that can roll into your final end mortgage. What consumers don’t realize is that the costs and holding expenses are theirs, and the leverage (for quality control) of having the builder use his own financing is limited. The cost for buying the lot, builder draws, holding and financing costs can easily run in excess of $10,000 for building a $500,000 home.
The other option is going with a builder (usually a larger volume builder) who covers the costs of financing with you putting down a series of manageable down payments and simply have a mortgage at closing to buy the new home. Many buyers believe they have more quality control when the builder has so much more invested. This may or may not be accurate since some national builders don’t have the customer service and attention to detail that a smaller builder does.
Some buyers like the idea of a small builder, but they should go into this process with their eyes wide open and be prepared for the expenses involved.