And you should also make sure that you pay all of your bills on time to slowly, but surely, increase your credit. This step will take some time, unfortunately, but it is the best way to enhance your credit. You may want to have a credit company check your account for any credits and clear these up – doing so can boost your score by many points quite quickly and help you afford a home.
This step is critical because you’re going to have to take out a loan for financing a home – most people cannot afford to build a house out of their own pocket. These loans are, in essence, your mortgage. And they are designed to be similar in payment cycle and cost, so you can usually get a pretty reasonable loan if you balance your credit and make sure that it is as healthy as possible.
Save Up for a Down Payment
The down payment for a home can help not only to decrease how much you need in a loan or mortgage but also help get your home builder started more quickly. Typically, you want to save up at least 10 percent or so of your home’s total cost. Some people try to save up around 20 percent, though, which is a good idea if you have poor credit and need a little more collateral on the home.
How much money is this going to end up being for you? That all depends on many different factors. For example, if your home is going to cost around $100,000 to build – a potentially low cost in some areas – you’re going to have to pay at least $10,000 in a down payment. However, you may also want to spend as much as $20,000 if you’re going to decrease your mortgage cost and make it better for your needs.
Saving up for this down payment is often the toughest part of homeownership for many people. However, it is worth cutting back on restaurant trips, vacations, and other non-essentials for a year or two to save up the money. There’s nothing like moving into your own home and having full control of how it looks, the various design elements integrated throughout, and more.
Calculating Your Full Loan Cost
When getting a loan for a home builder and a new home, it is critical to calculating how much you’re going to have to ask for in the loan. Your builder should be able to give you a good estimate of this price, which is typically reasonable and designed to meet your needs. An excellent range to anticipate for this cost is around $80 to $400 per square foot, give or take. This range of prices is due to the materials you use, the finishing you do, and more.
As a result, you need to research factors such as the design fees – which cost anywhere from 5-15 percent of the house cost – professional prices – such as hiring surveyors, energy experts, and electrical specialists – licensing and permit fees – critical for making sure that your project is legal and approved – preparation of the site – removing trees or anything else that may get in the way on your property – and the full construction costs of your home when it is done.
Don’t worry if this step seems too complicated for you to do on your own. Most of the time, your builder will help you with it because they know that you will need some assistance. Most high-quality professionals of this type should fully understand how to perform these steps and will take the time to assess your overall needs with you in a way that streamlines the building projects and gives your home a professional look that you want and deserve at a price that you can more easily afford for your needs.
Closing Costs
Lastly, when you’re working with a home builder, you need to understand that a certain amount of your loan will go to what is known as closing costs. These extra costs are unavoidable and add a few extra thousand dollars to the home’s price. They consist of items such as paying the realtor to secure the loan, closing the deal with landowners where you’re building the house, and much more.
All of these costs may seem excessive to some homeowners, but they help those who got you your home get paid for their time and effort. For example, it can take days to close some deals and can be very exhausting for many builders and realtors. And other types of closing costs are designed to pay these individuals back for personal investments that they may have made in a home.
As a result, you need to sit down with your builders and realtors and calculate the closing costs before you finish. Though some of these expenses cannot be derived until later after the house has been completed, there’s a good chance that they can at least give you an idea of how much you’ll have to pay. This knowledge can help you plan your finances more fully and effectively.
Don’t Ignore This Process
As you can see, fully understanding the financing process behind working with a Des Moines, Iowa home builder is nowhere near as complex as you may have thought. All it requires you to do is trust your construction expert and take the time to work with them in a smooth and streamlined way. So please don’t hesitate to contact us at Sundance Homes to learn more about how we can help you.
