Our latest reader has posted a question about new home construction loans in general and is also asking why he may not be eligible for a loan. He and his wife make a relatively good income. They have stable jobs which they have been at for 10 years and they have an excellent credit rating. They also have $30,000 to place as a down payment on the property and they already own the land. they have the plans, but have not proceeded with obtaining building permits or hiring a contractor as of yet. He wants to know why it is so difficult to obtain a new home construction loan and what he can do to improve his chances?
New Home Construction Loans
New home construction loans are much more difficult to obtain even when you have everything lined up, a great reputation from a credit perspective and also from a builder perspective. Individuals usually lack in the latter category and many banks will just shy away from them, thinking there is just too much risk associated with this type of loan. There can be a lot of risk in terms of the builder completing the home as well as schedule issues that many banks are just not willing to take on.
Factors in the favor of this particular couple include:
- They already have the land
- Their credit rating is excellent
- They have $30,000 saved for a down payment
- The plans have been drawn up by an architect and
- They have stable jobs and income.
