4 Advantages of Our Construction Loan Program

All across Metro New Orleans, realtors are observing a shortage of housing inventory.

According to the Gulf South Real Estate Information Network’s January 2021 stats for the Greater New Orleans region, there was roughly a 1.8-month supply of active listings compared to a 3.8-month supply in January 2020.

Pending sale numbers have risen 30% year over year and average days on market has decreased by 28%.

It is what is often referred to as a ‘seller’s market,’ and eager buyers are snatching up homes on both sides of the lake and on the West Bank – when they can find them.

But what is a qualified buyer to do when he or she can’t find the ideal home or, frankly, doesn’t like what they find?

One answer – when it makes financial sense – is to build new or renovate the old.

With our competitive construction loan program, now may be a great time to do just that.

Here are four reasons to take advantage of this program.

#1: Build Your Perfect Dream Home

If you’ve been stalking the MLS listings, touring homes that check most of your boxes, and you still can’t seem to find the perfect house among the sparse inventory – you have a few choices.

  • You could settle on a house that fits most of your criteria and live with it as-is.
  • You can purchase a home and use a renovation loan to remodel it how you’d like.
  • You can build a brand new home that fits your wish list exactly.

You might be surprised to learn that you can finance a new construction home – and build the home of your dreams – with as little as 10% down.. The lot purchase can be financed and, if you already own the land, it’s possible to use the equity of the land toward your down payment. Plus, fixed interest rate loan terms are available for peace of mind.

#2: Vet Your Builder and Customize a Disbursement Schedule

Our  construction program allows you to choose and vet your own builder or contractor and work with them to conceptualize your dream home and make it come to life.

During the construction phase, you’ll only be responsible for interest-only payments on the funds that have been dispersed, the necessary real estate taxes, and homeowner’s insurance payments. Your builder will need to agree to a draw schedule, which is a predetermined plan for when loan disbursements will be made to you based on the completed project milestones.

An example disbursement schedule might be:

  • Draw 1 - Foundation
  • Draw 2 - Framing, roof, exterior doors and windows
  • Draw 3 - Plumbing, HVAC, electrical, insulation, and drywall
  • Draw 4 - Interior doors, cabinets, and countertops
  • Draw 5 - Flooring, finishes, and Certificate of Occupancy (COO)

#3: A Streamlined, One-Time Closing

We offer both traditional standalone construction loans that require 2 closings (and 2 approvals with 2 closings) and our popular streamlined one-time close construction loans.

One-time close options are also called construction-to-permanent loans, which means essentially that – these loans “convert” to a permanent mortgage at the end of the construction phase, with one closing at the beginning of the process and a simple modification at the end.

Once the construction phase is complete, the loan will modify into a traditional mortgage loan with principal and interest payments. 

#4: Take Advantage of an Interest Rate Float-Down Option

Once the construction of your home is complete, you may be able to take advantage of an ‘interest rate float-down’ option.  

Can’t Find What You’re Looking For? We’d Love to Help You Build Your Dream Home!

More buyers are opting to build new or purchase and renovate thanks to the low inventory of today’s real estate market. We’re on a mission to simplify the construction loan process with our competitive one-time close construction loans. If you’d love to finance the building of your dream home, reach out to a mortgage loan officer in your area to learn more and get pre-qualified today.

 

These articles/blogs are for educational purposes only and provide general mortgage information. Products and services are subject to change, For more information on available products and services, and to discuss your options, please contact a Gulf Coast Bank Home Loans  Loan Officer today.