What is the process of building a new home, from loan approval to land purchase to building to closing to mortgage loan? We're so new to this.

Asked by Seller/Buyer in 06482/06470, Newtown, CT Sun Jan 20, 2013

We plan to stay in town. We need to sell our home before buying something but we are pre-approved for a mortgage. The money from our sale will be our downpayment and the money we use to make our new home ready to move in. Because the inventory now in our price range of up to $500000 isn't what we want, so many dated homes, we are considering building instead. Can we do this if we need our home to sell first?

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Jay Cooke’s answer
Jay Cooke, Agent, Newark, NJ
Mon Jan 21, 2013

There is some useful information in the answers below. The first thing I would do is go to several local banks and sit down with a loan officer. The financial meltdown changed a lot on the mortgage scene. Products were removed, standards tightened etc. See what programs the banks will offer you or anyone else who wants to build. Your decision on how to proceed will be clearer after this step.

Good luck,
Jay Cooke
Web Reference:  http://www.jaycookehomes.com
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Mark A. Stan…, Agent, Osterville, MA
Sun Jan 20, 2013
In my experience you would start with 2 loans, a land loan which usually requires 30% down and a construction mortgage. The money from the construction mortgage will be paid out on a predetermined schedule by the bank with a holdback at the end. After completion these are usually converted to your typical mortgage. Usually for the land and construction you'll have to deal with a local bank that holds these in their portfolio. Good luck.
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Ted Kostzews…, Agent, Stratford, CT
Sun Jan 20, 2013
I would strongly suggest that you consider finding someone willing to act as your General Contractor. This cradle to grave purchase can be frought with many unforseen obstacles and headaches. If you have a full time job, you're not going to need another one, especially one where you lack experience. In addition to being a Realtor, I own a handyman business. Many of my clients are former customers of contractors who never showed up, didn't do things right, or never finished the job. Tread carefully. If you haven't worked with a Realtor in trying to find an existing property that can be modified relatively easy in comparison to going the cradle to grave route, try one. We have more resources to work with at times and might just be able to save you a great deal of headaches. All that said, if you are still inclined to purchase and build, talk with your lender about what used to be called a bridge loan. This helps you work in concert with the bank and the buying/selling coordination process. Not sure these loans still exist given the volatility of the mortgage market, but at least discuss similar alternatives with them. You appear to be in good shape for finding a new home, and that's a great thing. Best of luck.
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Patty McManus, Agent, Danbury, CT
Sun Jan 20, 2013
There are many variables in the process. If you have a realtor, please give him or her a call to discuss your goals at length. If you don't already have a realtor, ask a trusted friend or family member for a referral.
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Josh Barnett, Agent, Carney, OK
Sun Jan 20, 2013
Most Builder's offer consulting services. You can call Two Structures Homes at 405-249-0152 and speak with Mr. Evans. He can go over Two Structures Homes Consulting agreement and you will feel far more at ease having an expert on your side.

Best of Luck,

Josh Barnett, Realtor
Metro First Realty
Web Reference:  http://www.GetSoldOKC.com
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