Figuring out the financing for your new Poconos home may not be on your list of “most fun things to do this week.” Without it, however, you’ll never get to the good stuff such as deciding on floor plans, selecting cabinets and countertops, or deciding which color to paint the great room. Without financing, nothing else happens. But which loan is right for you?
Like so many questions in the homebuilding process, the answer depends on your specific situation and needs. What’s right for one homeowner isn’t necessarily the right solution for someone else.
We’re builders—not financial advisors or loan experts. But here are some general things to think about as you work on the financial side of the homebuilding equation.
The Old Standby May Not Be the Right Choice for You
For many years the 30-year fixed-rate mortgage has been the “go-to” loan. It works well for a lot of people, but there is some expense built in. The rates are commonly a bit higher and you pay for a longer period of time. That doesn’t make it bad or wrong, but if you don’t plan on staying in your home for many years, you might want to consider something like a 5/1, 7/1 or 10/1 adjustable rate mortgage. Check out other options. What you can afford for a downpayment can make a difference in the kind of loan—and the rate—you can get.
Get ready for a lot of paperwork—but don’t be alarmed
None of us has yet forgotten about the financial crisis that sent the housing industry spinning. Lenders tend to ask a lot more questions these days. It’s just a fact of life. You’ll want to gather all of your financial information together ahead of time so that you don’t get held up digging for it when seeking a loan. Rates can change rapidly and you don’t want to miss a good opportunity because you don’t have your information ready.
Shop Until You Drop?
When it comes to finding a loan you really don’t need to shop until you drop. It will drive you crazy. But because rates can change frequently (even daily), you’ll probably want to have at least a couple of lenders lined up that you can compare. You don’t have to go with the first lender you talk to.
Regardless of what kind of loan best fits your needs, you’ll want to begin working on this ahead of time. There’s nothing more frustrating than finding the floor plan you want and the lot that’s right for you—and then not being able to move forward because your financing isn’t in place.
