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BUILDING BASICS
By Liz Burrow
If you have decided to take the plunge in favor of building a home over buying a resale, here are some differences in the process to help decide which way you may choose to go.
CONVENTIONAL FINANCING
This is most common in a planned development such as Lake Linganore. Most builders own the land on which they build, or purchase it on behalf of the buyers. Much like a resale, the purchaser puts down a deposit to secure the property and once the home is built, goes to settlement to close on the home.
In the case of a spec home the builder picks the design and starts the home prior to finding a buyer. This offers a new home, but with the least opportunity to make selections or modify the design. The advantage however is that this generally has the shortest build period, allowing buyers to move in quickly.
In larger planned sub-divisions, the builder often picks specific home designs to match individual lots. The buyer then chooses a plan the builder offers, but is limited to lots which were selected for that plan. This still allows many opportunities to add upgrades, bump-outs and enhancements to the home and the chance to select all finishes. In most cases, buyers may also select exterior elevations and colors, although with some builders these selections have already been predetermined and agreed upon with the HOA, to ensure the harmony of the street.
Smaller builders tend to offer more opportunities to customize and modify both the interior and exterior of the homes and often do not have specific models designated to individual lots, allowing for more flexibility in choosing a design and making it your own.
CONSTRUCTION TO PERM
Although very different, this still offers loan types such as VA and FHA and some are even available with low down payments. The fundamental difference is that the builder does not own the land and the client is required to purchase it. This is not a separate transaction however and forms part of one mortgage loan.
This certainly allows a maximum of flexibility in home design but is generally the lengthiest process of all. Once the land is identified the house may be selected from a library of plans or designed specifically to fit the lot and the buyer’ s needs. Land and home cost are rolled into one loan to cover everything related to building the home and once completed, the loan is modified from construction to permanent.
Each building type has its very distinct merits, depending on the buyer’ s needs. A general rule of thumb is that the more flexibility offered with the build, the longer the process. If you want a new home but need to be in quickly, there will likely be less opportunity to customize. For a more custom home, the process may not necessarily be more expensive, but it will certainly be longer.
* Resident realtors are welcome to submit real estate articles for print in this column. All articles must be strictly information and market oriented.
22 LakeTalk March 2017
Rely on Linganore Resident Specialist
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