Episode 5: Financing Your HomeIn this episode, Rick Bell walks you through the essential steps of financing your custom home. Whether you're paying cash, using a construction loan, or a hybrid approach, understanding how financing works can save you time, money, and stress.
What You’ll Learn - Pros and cons of paying cash vs. financing
- What to ask when selecting a construction lender
- Key documents required for loan approval
- How construction loan draws work
- The difference between one-time close loans and refinancing
- Tips for staying organized during the loan process
Glossary of Terms - Construction Loan: A short-term loan disbursed in phases as construction progresses.
- Permanent Loan: A long-term mortgage that replaces the construction loan after completion.
- Construction-to-Permanent Loan: A one-time close loan that converts to a permanent mortgage automatically.
- Loan-to-Value (LTV) Ratio: Compares your loan amount to the home’s appraised value.
- Draw Request: A builder’s request for funds based on completed milestones.
- Conditional Loan Commitment: A lender’s agreement to fund the loan pending final conditions.
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