When you are planning to partner with new home builders in South Carolina, you have several loan options available and most likely, no idea where to start. Between the three different kinds of loan options—Construction-only loan, Construction-to-permanent loan, and End loan—you can choose the best option catered to your needs.
Skip the research and read on for a breakdown of each loan option, outlining the pros and cons, as well as who they’re best for.
Construction-Only Loans
When you decide to take that big step and build a brand-new home, you’ll need a construction-only loan which is different from other mortgages. This short-term loan typically lasts only one year and it will cover the building costs for your home—but there are pros and cons to consider:
Pros: This loan option may be beneficial if you already own the land and have access to other funds to pay for any additional expenses related to your home build.
Cons: Construction-only loans are harder to get than the other two loan options since they carry a higher risk for lenders. Additionally, these types of loans usually come with higher interest rates tacked onto your expenses with new home builders in South Carolina.
Construction-to-Permanent Loans
For the long-term seeker, this loan option is ideal. This one-time loan funds both your construction costs and then converts into a permanent mortgage after the home is built. During the building process, you will just make interest-only payments on the borrowed amount until the project—and your dream home—is complete.
Pros: This type of loan offers higher borrowing limits than a construction-only loan. Building your home with new home builders in South Carolina can seem overwhelming, but with this loan comes the peace of mind of knowing that you are only dealing with one lender throughout the entire process.
Cons: Construction-to-permanent loans have more stringent requirements than construction-only loans, such as:
- Higher credit score standards
- Larger down payments
- More paperwork and documentation
End Loans/Mortgages
If you’re looking to wait until the home is complete before financing it, then an end loan or mortgage may be the best option for you. This loan works in the same way that buying a pre-existing home would work—just fill out one application and the lender will do the rest!
Pros: Since there’s a finished product to back up your claim, this loan option is much easier to obtain.
Cons: Unfortunately, this loan option may not be available if you’re looking to build your home with new home builders in South Carolina since the house will not yet exist for a lender to approve financing for.
No matter which loan option you choose, make sure it fits all of your needs and that you can comfortably repay. Building a home is a huge accomplishment and you should pick the financing option that will work best for your goals!
Begin Your Epic New Home Build with Build On Your Land
At Build On Your Land, we offer a range of new home-building services to turn your dreams into reality. Our experienced new home builders in South Carolina are here to help you craft the perfect custom-built home for you and your family. Contact us today to get started on your amazing journey toward making your dream home a reality.
