Ben Officer-REALTOR®

Its exciting to plan for and execute the new home purchase. You are choosing the builder, the lot, the style, and all the little details like flooring etc…  True choice.

Now, you ask yourself how do I get financing for something that doesn’t exist yet? Good question.

You have to either pay cash (I wish I could….) or get financing through your Mortgage Broker or Lending Institution. To qualify you need at least a 5% down-payment and a total cost for the amount to be financed. This could include the lot, the home, and any extras that are going into the home.

You are going to need the builder to make schedule of costs and a time-line because the builder will need to get the financing in stages. This is so he/she can pay for the lot and to pay the sub-contractors who are working to build the home.

Hence the name “draw” mortgage, as I call it. They draw on it, as they complete the home.

You will have to work closely with your Mortgage Broker/Lender to ensure that they know what is happening and that they are ready and able to forward the funds when they are needed.

I have asked Natalie Wellings, a licensed Mortgage Broker with Mortgage Success to comment on this post to fill it in some more, from her perspective.

   Ben