Building a Home: PRE-QUALIFY

When it comes to building a home, most people want to jump right into the fun part and begin by choosing a house plan. However, it’s actually really important to speak with a mortgage loan officer and pre-qualify for a loan before you make any selections.

Pre-qualifying with a knowledgeable mortgage loan officer allows you to:

Know how much home you can afford.
Many potential home builders think they’re “just looking”, and then they find their dream home sketched out in a book of house plans. While it’s fun to dream, it’s important to be realistic and understand what kind of house you can actually afford to build. By doing so, you can avoid the heartbreak of finding out that you can’t afford your dream home. On the flip-side, understand that when you know your borrowing limits, you can tailor designs to your budget realities.

Knowing what you can afford can help you make better decisions in the design and building process. For example, if you haven’t yet purchased a lot, that amount will need to be factored into your budget. You may also decide to skip the jetted tub in exchange for granite counter tops. Having a solid of idea of the numbers you can work within takes a lot of the guesswork out of the process.

Know which loan you qualify for.
Your mortgage loan officer can help you discuss the options available to you. We offer a variety of financing options, including Construction-Perm options with a one –time closing (combination of a construction loan and a permanent loan in one loan). Your mortgage loan officer can also discuss the pros and cons of each option and help you decide which will be the most beneficial to you and your family. For example, if you plan to purchase a lot and begin building right away you will be best suited with a different kind of loan than someone who is purchasing a lot but not looking to build for a year or two. It’s important to share this information with your mortgage loan officer.

Knowing the process.
When you begin working with your mortgage loan officer before you begin selecting plans and contractors, you have an idea up front of what the process entails. For example, you’ll be better prepared to ask the right questions as you determine who will build your house. Mortgage loan officers are more than happy to answer any questions you have concerning the unique process of financing the construction of a home with a permanent loan option after the home is built.

Now you understand why pre-qualifying is so important, but do you know how to do it? It’s really simple! You will need to meet with your mortgage loan officer. Together, you’ll discuss verbally some basics of your financial situation (such as income, down payment and outstanding debt). The loan officer provides you with a free estimate of your borrowing power based off of this information. Some lenders may run a credit check, but this isn’t true across the board.

Read the next article in this series:

To learn more about the home loan options that are available to you, speak with one of our loan officers today.




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