Other than improved pricing, the major benefit to the borrower is that an experienced broker will be able to maneuver the lender's application and approval process.  Many borrowers are qualified, but with constant changes in the lending environment, navigating the financial markets requires someone with great expertise.  A mortgage broker is the borrower's best advocate. 

To include these other annual expenses in your mortgage payment, you will need to set up an account at loan closing.   The lender will determine what amounts need to be deposited into this fund so that when the real estate tax bill is due, there are sufficient funds to cover paying the taxes.  With less than a 20% down payment, impounds are generally required by the lender.  You may request an impound account if you make a 20% or more down payment (or do not borrow more than 80% of your appraised value on a refinance) and find it more convenient to have everything in one payment.  Often this will provide a slight savings in fees at closing.

There are many very specific things that a potential borrower can do to improve their score.  We can assist you in this area by analyzing your credit and advising you on what needs to be done.  A few examples of ways to upgrade credit are:

1.  Do not close open accounts.  This sounds counter-intuitive, but closing open accounts, particularly accounts you have had for a number of years, will actually lower your score by 5 to 10 points per account.

2.  Do not make big purchases like an expensive vehicle assuming this new 'credit worthiness' will help you qualify for a mortgage.  Every new account temporarily lowers your score until you reach certain benchmarks, like the 13th payment, or a balance less than half your original high credit.

3.  Do not pay off old collection accounts if you are intending to apply for any credit within six months to a year.  The 'paid collection account' entry will drop your score by 20 to 40 points as it gives a 'fresh date' to the old account.  Once your mortgage is approved 'subject to paying the account off' you can pay it off at closing on your purchase (or refinance) through the escrow company.

Contractors often take 3 or 4 weeks to give you a written cost of building contract.  Underwriting includes a review of all materials and specifications, cost of construction, cost of utilities, appraisal value and other site preparation expenses and that takes a few weeks also.  Once the loan is closed, the lender will not allow line items to be changed, so any change orders after that need to be paid by the homeowner.  Contractors also can charge a penalty for making changes (often 1.5 times the actual cost plus their profit), so accuracy is critical.

Designing your own home can be exciting and fun, but we do suggest you have your design reviewed by an architect or construction manager or designer just in case you leave out something important.  Functional obsolescence, or a flaw in original design, will always lower the re-sale value of your home.  A flaw may be something as simple as where you place your electrical box or the height of your basement ceiling or access to a bedroom.  What is convenient for the contractor may not be aesthetically pleasing to you or a new buyer, so pay for the experts up front. 

Also, be very specific when you talk with your builder about what kind of quality you want.  Standard windows, for example, may mean triple-pane to you but double-pane to your builder.  Allowances for fixtures may sound like a lot of money, but when you put in the clawfoot tub there may not be enough left over for a sink.  Go to a builders' supply house ahead of time and see what new materials, products and costs of fixtures are for lighting, plumbing and kitchen.  A little research goes a long way. 

Small acreage parcels that are not on public water or sewer are a special case but can be financed if they have a positive perc on the septic and a well with an acceptable flow of 5 gallons of water per minute over 4 hours and are within a lender's general lending area.  Other conditions may also apply, such as utilities already being to the property or an access road. 

New manufactured homes that are a minimum of square footage may also be considered for a construction/perm loan, but please call us with the details before you sign any binding contracts.  There may be extra charges and the home must have the axles removed and be tied down with steel straps so that it can be converted to real property (not personal property).

Vacation homes, A-frames, and unusual designs or concepts are always of more concern to a construction lender.  Let us help you with a pre-approval before you build that pyramid or dome house. 

Oh!  Please don't start your home from 'cash on hand', get it half done and run out of money.  This is the kiss of death on getting financing to finish up, as mechanics liens have first position under law.  As soon as somebody delivers a load of lumber to your lot, they have in effect a 'first mortgage' until paid.  Anything more than general excavation will make it extremely difficult to get a constrution lender to approve your loan request. 

More questions?  Email or call.  We are happy to help you organize yourself.

It is our understanding that if you did not have at least $5,000 in federal income tax liability (not including social security or medicare taxes), you will only get a credit for the amount you owe.  This will then need to be paid by over fifteen years in equal monthly installments.  Obviously we are not accountants nor attempting to give you tax advice, so please check with your tax preparer or the I.R.S. directly.  In addition, as the federal government is in the process of attempting to entice buyers back into the housing market, this credit may change or be enhanced or replaced so please verify your information before acting on it or filing your return.