Ask Sir Walter:
Home Financing Options

Q: We have started the new home building process by finding our lot and narrowing down the home plan design to three floor plan options. We think we know what our budget is. How do we know for sure that is what we can afford? And what are our home financing options? - Lost in Home Financing Options

A: Dear Lost in Home Financing Options,

Congratulations as you embark on one of life's most rewarding experiences—your new home building project!

Like most people, you are starting the home building process with a budget in mind. The next step many people choose to take is to pre-qualify for a loan. That way you can make sure your lot and favorite home design fit within your budget parameters before you are too far into the new home building process.

When you pre-qualify for a loan, you will have one less item on your checklist during many phases of the new home building process. Finance is a factor when you are initially choosing your new home's plan, when your plan is finalized and priced and when your home building materials are purchased. It is also a factor if you have not already purchased your lot.

There are three basic financing options available for new home construction loans:

• Construction-to-Permanent Loan. Often, getting approved for a construction loan can be tricky. In many cases, two loans are required—one for construction and one for permanent financing. Usually you will have to pay closing costs on both loans, not to mention the extra paperwork, time and hassle involved. A single-close Construction-to-Permanent Loan combines both construction and permanent financing into one loan (and one application).
• Bridge Loan. This is the perfect way to access equity in your current home so you don't have to wait to sell your old home before building your new home. With the equity in your current home, you have a down payment for the Construction-to-Permanent Loan...and you don't have to sell your home to start building your new dream home.
• Lot Loan. This is the right loan if you're looking to purchase a residential lot for future construction of your new primary residence or second home. Once you have purchased your land, you will have time to design your new home and choose a contractor.

At Lindal, we work with several banking partners that are experts in the field of new home construction financing. Together Lindal and these banking partners are dedicated to answering your questions and your builder's questions so your project keeps moving smoothly from groundbreaking to house warming. In fact, you can get started today with the loan pre-approval process with our partner IndyMac Bank.

Best regards,
Sir Walter Lindal

If you have additional home financing budget and options questions, or any other home building related questions, please email to get a personal response.