When looking to build a new home there are a lot of things to consider. How to finance the project, do you have to sell your home first and scheduling the entire project is very important. The first step I recommend is finding the right location. We have new construction in Groton CT, New Construction in Stonington and a new development in Mystic with 4 different builders.
How the project is financed is often a determining factor in the price. If you are required to purchase the land up front and obtain a construction loan to finance the building of the home, the price may be less, but the caring costs during construction, like interest, will increase the cost to you. Many people cant afford this type of loan because they could be required to pay a mortgage on their existing home while paying for the new mortgage that is paying for the cost of building the new home. It will also be important that the project stays on schedule.
The other option is an end loan. This means that the builder finances the project and you are required to have a single closing at the end of construction. In this scenario you don’t own the land while it is being built but you also don’t have to pay additional interest if the project falls behind. In addition to only starting payments after the home is ready, you are able to obtain a more favorable interest rate as construction loans can be higher risk for the banks.