When it comes to building a new house floor plan, or customizing a building project, landowners and homeowners have two financing alternatives: the one-time closing loan and a construction-only loan.  The one time closing loan finances both the build and the home loan–whereas the construction loan is for architecting the house plan.

With the one-time closing loan or the “all-in-one construction loan,” it  eliminates the extra step  process of shopping around for a mortgage or home loan. Most borrowers opt for the one time construction loan to have one closing, ultimately reducing closing costs. Prior to opting for the one-time closing loan, make sure that the lender will not require interest payments while the home is under construction.

To calculate the cost of building a new house floor plan, House Plans and More.com has an easy to use House Design Estimating software, click on house plan estimation to calculate the cost of a construction loan and review the download details. 

Upon the house floor plan’s completion, the construction loan transitions into a long-term home loan.

In general, construction loans range in duration from six months to a year, requiring a “draw schedule.” The draw schedule acts as an outline of when specific tasks are to be completed, and the corroborating terms of releasing funds to the builder.

A construction-only loan is a two part financing process. The first closing begins with the construction. A second closing is necessary to refinance the construction loan, transitioning the mortgage into a permanent home loan.

Review other home buying tips.

Although the one-time closing loan saves on closing fees, it inhibits the borrower from shopping around for a home mortgage with a lower interest rate.

On the contrary, the construction loan tends to incur upfront costs, offering more flexibility and an opportunity to recuperate the savings over the mortgage loan.

Read more about obtaining a construction loan to build a new house plan.

With the White House extending the first time home buyer tax credit stimulus plan, consumers shopping for a new home have several tasks to simplify the quest for a new domicile. Use these seven-basic home buying tips:

1.    Set aside the down payment. Fifteen to 25 percent is an ideal down payment for two reasons: 1) the more you have down the better your loan options. 2) Nominal down payments mean a higher monthly mortgage and that you own less of the equity.

2.   Be pre-approved. Before you go house shopping, first consider how much you “think” you can afford. Regardless of how much you “think,” be pre-approved for a home loan. Lending institutions will set your budget with a pre-authorized mortgage. If you’re a serious shopper, you need to be prepared to make an offer.

3.    Shop around. After you’ve been pre-approved for a mortgage, your total loan value, search for homes within that price range, your new home budget.

4.    Conduct research. If you’re interested in buying a home in a specific neighborhood, analyze the costs of comparable properties. If you’re working with a real estate agent, most will provide this information at no cost.

Optional tip: Real estate agents can minimize the time and preferable choices of finding a new home. Expect to pay 5 to 10 percent in commission.

5.    Opt for basic financing. There’s no such thing as “growing into” a mortgage. Steer clear of “alternative loans,” as the rates tend to provide a false sense of affordability. For instance, although an adjustable rate mortgage (ARMs) appears feasible on paper, overtime these mortgages move with the market.  Instead, seek a fixed mortgage rate where payments remain the same (in example a 30-year fixed mortgage), alleviating any financial surprises.

6.    Hire a lawyer. Consider an attorney, who not only specializes in closings, but also charges a flat rate as opposed to by the hour. Have a list of prepared questions.

7.    Negotiate the asking price. Motivated sellers are more apt to bargain with buyers, who already are pre-approved for a mortgage. Armed with a pre-approved mortgage, and real estate marketplace research, place an offer 7 to 10 percent below the asking price.

Other article Home Buying Tips: Construction Loan Vs. All-in-one Construction Loans

Related Articles:

First Time Home Buyer Mortgage Tips For Borrowers

Tips for a First Time Home Buyer

5 Easy Tips You Can Use To Save For A Down Payment On Your Next Home

How To Get Pre-Approved For A Home Loan

Get A Good Home Price By Negotiating