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Can I expect to negotiate a price for new construction as I would for an existing home? Or are new home prices more set in stone? And if the price of the home is generally not negotiable, what, if anything, is (e.g. asking them for reduced prices for options, etc.)? I would appreciate any information you have on standard practices. Thank you. |
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| A. |
Everything is negotiable! Try and get everything in the initial contract. Change orders are where a lot of money is made. The builder will sharpen his pencil when negotiating the initial contract. One ground is broken, the power balance changes. Your best bet is to get the high profit items and allowances in your initial contract: decks, finish treatments, luxury items, fixture upgrades, kitchen allowances. Know what you want before you sign by shopping the showroom or recommended subcontractors. One builder I know earns 40% of the profit on the total house on change orders. Invest your time in getting the plans specs and contracts completely done before you break ground. You'll be well rewarded for your effort.
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| Q. |
Can you buy a house without having a down payment and or closing costs? |
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| A. |
One can buy a home with less than perfect credit, or with little money down.
You'll end up paying a higher interest rate to compensate for the risk. FHA and similar programs allow a potential homebuyer to get a loan with as little as 3% down. If you have very good credit, there are loans that require virtually nothing down.Your best bet is to meet with a reputable lender and ask to be pre-approved.
The lender will be able to guide you towards your best options.
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| Q. |
Is it possible for us to refinance our home and in doing so borrow more money than is owed on the house so that we can do some home improvements/repairs? |
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Yes. If you have sufficient equity in your home, you may be able to borrow additional cash to cover your intended improvements or repairs.
If you need extensive renovations, you may be better served with a construction/renovation loan. This allows you to refinance your existing mortgage, obtain funds for renovation and improvements, and have just one permanent mortgage.Talk to an experienced loan officer to get more information. You can find construction and renovation experts at American Home Bank www.bankahb.com
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| Q. |
The builder has provided a blueprint and verbally told me it was 2230 sq ft. I measured each room, hall, closet, etc. and only came up with 2127 sq ft (I had read somewhere on the internet that closet space is not figured into square footage - is that correct - without the closet space the square footage is only 2073 measured room by room?). I also measured the house based on all outside walls and only came up with 2157 sq ft. The builder has stated that he is only charging me $110 per sq ft so the actual sq ft measurement is significant. What should I do now? Should I go to a ?professional? to have my blueprint measured? |
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Generally square footage is measured on the outside wall perimeter.
This means it includes closets, halls, etc. Without seeing the blueprints, I can't answer how the builder calculated the square footage. Your best bet is to ask the builder to help you understand how the square footage area was calculated. This way, you'll know what the builder did and give the builder a graceful way to correct any errors if he did miscalculate the actual footage.Finally, cost per square foot is a general measure of reasonableness for a given construction project. No builder I know actually calculates the selling price based on a price per square foot. Usually the price is built up by an estimate of materials and labor for a given plan, plus overhead, administration and profit.
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| Q. |
Do I have any negotiating power with the builder? We really love the
home and the location is ideal but we feel his price is too high. Do I
have any way of getting them to come down? Any ideas? PLEASE!! THANKS!!
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| A. |
The demand for new housing is very strong, and builders know that their homes will sell quickly. That said, here are a few ideas. If you are planning upgrades (Patio/deck, trim upgrades, etc.), you can negotiate hard on these prices and the builder may give in somewhat because these items are usually high profit margin items. Another strategy is to get a mortgage pre-approval and make a quick settlement bid with the commitment letter attached. Consider approaching the builder about building a similar home on a longer time frame, which may give you some price leverage.
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Do you lend to people who have less than 600 credit scores? |
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It may be possible to obtain a loan with a credit score less than 600.
You may be limited to a few loan programs, and you may pay a higher rate. You may want to check with several lenders for a pre-qualification for a loan.
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| Q. |
Are the rules for borrowing different for a second home? My wife and I are interested in buying a rental property. Is 5% down acceptable? Does the process work the same way it did for our first home? |
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Rental property can be financed for 5% down. Expect significantly higher fees and rates because of the lower down payment. A better alternative is to put 20% down by taking some of the equity out of your primary residence with a home equity loan. Your total cost to own the investment property will usually be significantly lower this way.
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Should I compare lending offers/options from multiple sources? A broker I contacted implied it was unnecessary & offensive because he would find the best deal for me. |
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Discuss your loan needs with two or three loan officers from reputable firms. Be open about your intentions. Good loan officers will respect your candor. By the same token, loan officers are professionals. They are paid on commission. Excessive shopping around makes a good loan officer move on to the next prospective customer...most loan officers offer fair deals, so choose on the basis of trust and value provided to you. Mortgage funds come from the same major sources, so if you get a 'great deal' beware.
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Do you offer loans for purchasing land that will be used for future construction? For example I would like to buy a lot for my future home (6 years away). Are 30 yr mortgages available for land? What is the downpayment requiremets, 20 %? What are the rates? Thanks |
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We offer lot loans than have the payments based on a 30 year loan, but require refinance after 3 years. If you own a home now, a home equity loan may be a better answer if you're 6 years away from building. Lot loans are generally used when building is anticipated in 6 months to 3 years. American Home Bank offers a program to refund the appraisal and related fees when a lot loan is refinanced into a construction/permanent loan with American Home Bank.
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| Q. |
i am building a new home soon what is the current interest rate on a 175,000 home that includes a lot purchase from a developer. 30 year fixed mortgage with 5 percent down. what is american home bank rate of interest? thanks please reply i have been checking local banks and bankrate.com averages and i think i am getting overcharged. also your homepage says you do not charge interests payments during construction i am getting charged for that too. last thing what formula do you use to figure how much mortgage insurance to charge. thanks waiting for reply |
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There are several factors that influence an interest rate and loan structure for building a new home. For instance, will you buy the lot from a developer and then select a builder, or will this happen simulateneously. Other factors include how long it will take to build your new home, the down payment you plan to make, whether you have a home to sell and the type of construction being done. You may also be able to arrange a construction loan that does not require interest payments during the construction period. Your best bet is to talk to a construction specialist at a lender that specializes in new home financing to discuss your specific situation. I'll put you in touch with one of our lenders
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