Question:

What are the pros and cons of builder-financed construction?

Answer:

Is it good to use builder-financed construction when having your new home built for you? This is a common issue for homebuyers when securing financing for a new construction custom-built house.

Usually, the question is should the builder take the construction loan and take a permanent mortgage right after construction is completed? Or, the buyer should go for a single construction-to-perm mortgage?

The advantages and disadvantages of having the builder finance the construction of your new home are:

  • You will have to take only one, permanent mortgage if the builder finances construction.
  • The builder will strive to finish the job as soon as possible to pay less interest on the costly construction loan and delays are unlikely.
  • If the homebuyer is financing their new home construction they have more power to ask for design modifications during the construction process.
  • Changing land title will be required if the builder finances construction upon house completion and prior to the homebuyer closing on the permanent mortgage.

Do not compare new home construction quotes from builders who finance construction to quotes where the buyer will have to finance construction, as those are incomparable.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
Why: Find your next home and save money.
Link: Search thousands of foreclosures. Free 7-day trial.
Link this QnA Print del.icio.us Digg
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
 Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA:

Common misspellings: mortage and morgage