At Alliance Financial Services, we believe that informed customers are confident customers. We know that building your dream home is one of the most important investments you’ll make for your family. An exceptional building experience begins with the right lender. Since we are a partner of Adair Homes we understand the importance of strong relationships. Let Alliance take the lead on your financing so you can enjoy building your custom Adair Home.
Here are answers to some of the most commonly asked questions from our customers.
Why should I complete a pre-qualification for construction financing?
It is common to want to postpone getting pre-qualified, but this is an essential part of the planning process and your ability to create your budget. For Adair Homes customers this is a “soft pull” which will not impact your credit score. Get started with out online application.
What’s included in the construction loan?
What’s included in a construction loan can vary, but it most often includes the price of the land, costs related to construction of the home, site development fees, money to cover contingency, and any closing costs.
How and when do I write an offer on land?
After you have received your pre-qualification you can make an offer at any time, but we encourage working with your Home Ownership Counselor to understand your budget and schedule your complimentary Site Evaluation.
What are the closing costs for a construction loan?
Total closing costs can vary based on the type of loan selected for your build. It is common to see closing costs total 3-4% of the loan amount. This amount can be financed to limit out of pocket expenses. Connect with our team for advice on ways to reduce closing cost.
Do I have to put money down?
A down payment is not always required and the amount will vary depending on the equity in your project and the type of loan selected. Most Adair Homes customers will fall into the range of 0% - 5% down. Learn more about the different loan options.
Do I make payments during construction?
When financing with conventional loans you will pay interest only on the outstanding drawn amount throughout the build. For VA and FHA an interest reserve account is added to the cost of the home resulting in no payment during the build.
What is the purpose of a contingency in a construction loan?
Contingency is an amount of money set aside to cover any unexpected costs that can arise throughout a construction project, if needed. We recommend a 5% contingency.
How long does it take to close?
Every scenario is unique, but we recommend a 90 day close to allow for a feasibility period when purchasing land with the construction loan. If land is already owned, it could be quicker.
Can I include acreage in the construction loan?
Alliance Financial has options for large acreage properties that are more than 10 acres.
Can I fund a second home or vacation home?
Yes, but they require 10% down and only are allowed on conventional loans
Can I use gift funds or 401k funds for my down payment?
Yes you may, on all loan products, with the appropriate documentation
Will I have mortgage insurance?
If you are purchasing land with a conventional construction loan and are putting less than 20% down, you will have private mortgage insurance. If you own the land and there is 20% or more equity in the project, private mortgage insurance is not required. VA loans do not require mortgage insurance, FHA do and it’s for the life of the loan.