Now is the Perfect Time to Start Planning Your Dream HomeDesigning and building a home can be an exciting time for many individuals and families. But, as you start thinking about building the home of your dreams, it’s important to make sure your plans line up with not only your budget, but also your builder’s schedule and South Dakota’s construction season.
For potential home builders, late fall or early winter – construction’s offseason - is an ideal time to start discussing your plans with a general contractor and BHFCU mortgage lender, according to Leslie tenBensel, Black Hills Federal Credit Union’s assistant mortgage manager. In particular, getting an early start on the necessary paperwork, plans, and building schedule can help ensure you receive the financing you need to complete your new home on time and within budget.
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Gathering the Necessary PaperworkAmong the many hurdles you’ll encounter during the planning phase, one of the most important is securing financing for your project. To that end, it’s important to note that construction loans often require more leg work on the borrower’s part than a typical conventional mortgage, tenBensel said. A great reason to start planning your home building project sooner, rather than later.
“In particular, borrowers should expect to spend a significant amount of time finalizing specific documents with their builder, including a builder’s contract, architectural plans, city/county permits, and a declared budget,” tenBensel said. “All of these documents will need to be submitted to BHFCU, alongside your regular mortgage/loan documents and materials, prior to loan approval and closing.”
Normally, the process of loan approval and closing can take anywhere from 30 to 45 days, if you’re a motivated and well-prepared borrower, tenBensel said. However, borrowers should note that construction-specific documents often take time for builders to complete, especially the closer they get to the start of building season. That’s why sitting down with a BHFCU mortgage originator early in the planning phase can help save you valuable time and money, she said.
Additionally, while you’re working to secure financing for your new home, it’s essential to consider the amount of time your contractor will need to complete construction on your home. While home building projects typically require six to nine months to be completed, area builders often schedule projects months in advance to accommodate South Dakota’s short construction season and crazy weather patterns.
“If you haven’t planned accordingly, this could drastically impact your construction time tables, increasing the overall costs of your project and/or put you months behind your intended move-in date,” tenBensel said.
One solution to help streamline construction and financing is to take advantage of all-encompassing construction loans, like BHFCU’s Single-Close Construction Loans, she said. These types of loans come in especially handy if you’re looking to buy land and build at the same time; as both can be financed under the same loan, thereby helping you save money and spend less time on each phase of your project.
Additionally, with BHFCU’s Single-Close Construction Loans, borrowers have the option to make only a 5% down payment, with BHFCU financing the rest. This can be highly advantageous for borrowers who may need more flexibility in their construction schedule or would like more buying power to finance the home of their dreams, tenBensel said.
In general, building a home is a demanding, but highly rewarding process. Early preparation and the right financial partner are key to ensuring your dreams become reality. BHFCU’s mortgage lending team is here to help with the expert advice and convenient loan options you need to complete your homeownership dreams.