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Financing a New Build in Melissa: What's Different and What to Expect

  • Writer: Nitin Gupta, CRS, REALTOR
    Nitin Gupta, CRS, REALTOR
  • Nov 3, 2023
  • 3 min read



The excitement of building a brand-new home tailored to your preferences is unparalleled. However, financing a new construction in Melissa comes with its unique set of challenges and processes compared to purchasing a resale home. Here's a comprehensive guide on what's different and what you can anticipate when securing financing for your dream build.

1. Construction Loans vs. Traditional Mortgages

  • Traditional Mortgages: These are standard loans that buyers use to purchase existing homes. You borrow a lump sum and start repaying it immediately.

  • Construction Loans: Specifically designed for new builds, these loans provide funds in stages as construction progresses. Once the home is complete, the loan typically converts to a traditional mortgage.

2. Higher Down Payment

  • Expectation: Construction loans often require a higher down payment, sometimes up to 20-25%, due to the perceived higher risk by lenders.

3. Interest Rates

  • Variable Rates: During the construction phase, you might have a variable rate that can fluctuate with the market.

  • Locking in a Rate: Some lenders allow you to lock in a rate for the eventual mortgage before construction begins, protecting you from potential rate hikes.

4. Detailed Plans Required

  • Blueprints and Specifications: Lenders will want detailed plans of the home, including blueprints and a list of materials, to determine the loan amount.

5. Builder's Qualifications

  • Vetting Process: Lenders will often vet the builder to ensure they are reputable and reliable. It's essential to choose a builder with a solid track record and good reviews.

6. Regular Inspections

  • Progress Checks: The lender will conduct periodic inspections to ensure construction is on track before releasing the next payment to the builder.

7. Extended Approval Process

  • More In-Depth: Securing a construction loan can be a lengthier process than a traditional mortgage due to the additional details and vetting required.

8. End Loan Commitment

  • Conversion to Mortgage: Once the home is complete, the construction loan will convert to a regular mortgage. Some lenders require a separate closing process for this, while others combine both loans from the start.

9. Contingency Reserves

  • Safety Net: Lenders might require you to have a contingency reserve, usually about 5-10% of the loan amount, to cover unexpected costs during construction.

10. Potential for Builder Financing

  • Builder-Sponsored Financing: Some builders in Melissa have relationships with specific lenders and might offer incentives or deals if you choose to finance through them.

Conclusion

Financing a new build in Melissa requires careful planning, understanding of the unique processes involved, and collaboration with both the lender and builder. By being well-informed and proactive, you can navigate the financing journey smoothly and move one step closer to your dream home in the heart of Melissa.


Please call us at 469-269-6541 for more details and available homes!



VIDEO TOURS OF THE NEW HOMES IN MELISSA

Watch the latest video tours of the homes in Melissa by clicking on the image below.


 


Watch video tours of Model Homes by Highland Homes on YouTube here











About us: Melissa New Construction Expert Real Estate Agent



As a Top Real Estate Professional in Melissa, I understand the challenges that arise when buying a new construction home. There are over 100 builders in the DFW area. I work with most of the new home builders in Melissa and understand how various builders operate. I am familiar with the options they offer, current incentives and I frequently visit the upcoming communities they are building. I guide my clients through all steps of the new home construction process and aggressively protect their interests in the transaction.


As a holder of top real estate industry certifications and designations like CRS, ABR & GRI, I can offer my clients experience as a Buyer's Agent and REALTOR®, top Industry Customer Service, in-depth, up-to-the-minute and comprehensive market knowledge; honesty, integrity, dedication, and professionalism in my business.


Whether you are a first time buyer in Melissa looking to buy a home in Liberty or whether you are relocating to Melissa from California or moving your entire family from areas like San Francisco, Fremont, Palo Alto, Los Angeles, San Diego in California due to job transfer with your company, I can help you find a new construction home in Liberty in Melissa. Our relocation team eases the transition - whether you are moving across town or across the globe. We will work with you to find an area that best suits your professional, family and lifestyle needs. We have all the tools you need to help your home search. Whether it is video previews of homes, extended work hours, digital signatures for documents or more, we can make this process as comfortable as possible no matter where you are located.



What is most important to you in your new construction home in Liberty in Melissa? Send us an email at info@NitinGuptaDFW.com or give us a call at (469) 269-6541 to schedule a no obligation consultation. We’ll give you honest advice about Liberty community that you can use to help make your home buying decision.



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