Financing

Preferred lendors

Newtown Savings Bank

nsbonline.com
NMLS# 411347

Thomaston Savings Bank
Litchfield Bancorp

litchfieldbancorp.com
NMLS# 510148

Custom Home Financing Options

At The Corbo Group, we take pride in our deep understanding of the financial planning aspects involved in building your new custom home. Unlike some builders who require you to have your finances nailed down before starting a conversation, we offer guidance to help you find the right financing options and lender for your new home.

There are two main financing options for building a custom home: an end loan and a construction loan.

A construction loan is ideal if you are building a new home from scratch. It involves financing the construction and then converting the loan into a traditional mortgage once the home is built.

Process:

  • You purchase the land and lock in your interest rate from day one.
  • The construction loan acts as a line of credit, with funds disbursed as construction progresses.
  • Monthly inspections determine the value of completed work, and the bank releases funds accordingly.
  • Once construction is complete, the loan converts to an amortized mortgage.

Pros:

  • Interest Rate Lock: You lock in your interest rate at the beginning, providing financial predictability.
  • Lower Taxes: Property taxes during construction are based on the land value, typically lower than the completed home.

Cons:

  • Qualification: Construction loans require greater cash reserves, typically 20-30% of the home’s value.
  • Complexity: The process is more cumbersome, involving regular inspections and fund disbursements based on construction milestones.

An end loan is the simplest and most straightforward way to finance a new home. Here’s how it works:

Process:

  • You choose your new home.
  • An appraisal is conducted, and your documents are reviewed to ensure you qualify.
  • You set a closing date and make a down payment (typically 10-20%).
  • The bank provides the remaining mortgage amount, and you receive the keys at closing.

Pros:

  • Simplicity: The process is straightforward, with only one transaction at closing.
  • Ease: You know the terms and conditions upfront, making it easier to plan.
  • Direct Sale: Property taxes are assessed based on the purchase price, which simplifies tax calculations.

Cons:

  • Interest Rate Lock: You lock in your interest rate close to the closing date, which could be months after starting construction. This means you might face higher rates if market conditions change.
  • Higher Taxes: Taxes are based on the full purchase price of the home.

Financial dislcaimer

The information on this webpage is for general purposes only and does not constitute financial advice. We recommend consulting with a financial advisor for personalized guidance. The Corbo Group does not endorse any particular lender, and you are free to choose any lender that suits your needs. The financing options provided are illustrative and may not be current. We do not guarantee the accuracy or completeness of the information and are not liable for any errors. For specific advice, please consult a qualified financial professional.