What’s the best way to finance your custom-built home?
You’ve been dreaming of building a custom home, and now you’re ready to make your dream a reality. To do this, the first and most important thing you must do is figure out your budget. The budget drives everything else in a custom construction process. For instance, your architect and contractor need to know your budget in order to draw up plans that are in line with what you want and what you can afford. When it comes to financing, it’s crucial to work with a lender who is experienced in custom construction. Be sure to start this discussion early on in the process.
At Washington Federal, our specialty is home construction. It’s how we built our bank, dating back to when we first opened our doors in 1917. Originally we were a construction lender for folks moving into the Ballard community near Seattle. Nowadays it’s still a very large part of our business. In fact, custom construction financing currently accounts for more than 1/3 of our mortgage business. Our branch managers are well-versed in the process and can explain your options, and they’ll make sure you have a solid plan (and back-up plan) to support a successful construction project.
There are two ways to finance for custom-built homes: all-in-one and two-step loans. At Washington Federal, we offer all-in-one loans. We underwrite the entire project at one time, wrapping the construction and permanent financing together. There’s no second loan, dual fees, or wasted time and effort. With an all-in-one loan, you apply for a single loan that begins with the construction phase and carries you into a “permanent” loan once you move into your new home. Your interest rate won’t change, which means no surprises.
Think of it this way, we offer a 31-year fixed rate loan with the first year being interest-only until construction is complete. For those of you speculating on higher interest rates in the future, you can rest easy by taking zero interest rate risk with us.
If you are dreaming of building the home you’ve always imagined, call to speak with your local branch manager to learn more about your options. You can also check out our construction loan application checklist to ensure that you have everything you need.