Category Archives: New Home Building Tips

How to Finance a New Home Build

Borrowing Basics for Homebuilders

how to finance a custom homeFinancing a new home build is a bit different than taking out a mortgage on an existing home. The process doesn’t have to be difficult – we’ve outlined the borrowing basics of a new home build so you can get started on the fun part: building your dream home!

Cash is king of the land

Typically, lenders are cautious of lending money for the purchase of raw land. This is because if the borrower defaults, the land can be difficult for the lender to resell. As a result, some banks may request a large down payment with a high-interest rate. Land purchase lenders may be difficult to find, but fortunately we have some great ones in Pittsburgh that have made new homes a specialty. They understand the challenges and can often roll everything into one loan for customers to help eliminate this problem.

Putting the bucks behind the blueprint

Simply put, there are two major ways to finance a new home. The construction loan and the end loan. The end loan is more similar to a regular mortgage, where the buyer signs a contract to purchase the home when it’s complete. These types of loans are great for home buyers who don’t have a lot of money to put down or want to buy an already completed new home, the downside is that end loans are generally a lot more expensive than construction loans.

In a construction loan, the bank will set aside a pool of money equal to the total value of the mortgage and disperse money to your builder little by little as the home is complete. Many people will tell you that this means you have to pay your mortgage before you even get to live in the house, but this is somewhat misleading. New home buyers are responsible for interest during the time the home is being constructed, but only on the portion of the loan distributed to date so in general, the payment in a very small percentage of the future mortgage payment for most of the construction period. Essentially, it comes down to affordability. If a new home buyer has the cash to do a new construction loan they will end up paying a lot less in the long run, just like buyers who make larger down payments end up paying much less overall.

Eliminating risk – tips from the pros

As you can see, putting up the money to build a new home differs from taking out a conventional mortgage. Here are some helpful tips to help save your time, money and sanity:

  • Shop around. Look for lenders that offer combination financing, which may roll together all or at least part of the deal, minimizing costs and paperwork. Every lender is different in their approach, so shop around. If your builder forces you to use their lender in order to get the special pricing, odds are you are not only overpaying for any “freebies” elsewhere in the home, but paying way too much for your loan as well.
  • Budget wisely. The loan amount will be based on a budget you provide and the appraised value of your new home. It’s important to carefully consider and detail all costs of the project, including plan and permit fees, construction costs and loan fees. Many on your lot builders don’t include the full cost of things like utility lines, soil conditions or sewage. Make sure you know ahead of time who is responsible to pay for which items and compare apples to apples. If costs exceed the original budget – your wallet makes up the difference.
  • Be aware of changes in rates and construction costs. This is something we hear all the time, a buyer shops for a home, and decides to save up a little more money in order to put more money down or pay for a larger home. Unfortunately, when they come back the next year, the cost of lumber, concrete or other materials goes up regularly may have risen and eaten up what they saved. Ask your builder and lender if they can be flexible, there is a good chance you can start now when prices are low and if your builder lays things out right, you can add that sunroom or extra garage bay in a year or two.
  • Use these increases to your advantage. Most people know that the future value of your home will be determined by the value of your neighbor’s homes and how well your homes holds up to the bumps and bruises of everyday life. Given that construction material costs are constantly rising, the first half of the new home buyers on a particular street stand to gain much more appreciation than those who wait. It’s likely that the last person to build will end up paying 10% more or higher than if they were the first person who built and when a new buyer comes looking in 10 years, it’s the buyer who acted fast who reaps the extra money.
  • Make sure your home will stand the test of time. Ask a buyer who built with the same builder 5 or 10 years ago how their house is holding up, the internet is full of people who will tell you their experiences. Have they had to put a lot of money into upkeep or did the materials their builder used originally spare them this expense. The same thing is true of new homes that is true of many other products. The item that seems cheaper now might end up costing you more later, and that money can’t be rolled into a mortgage.

Choosing the Right Home Builder

How to choose a custom builder in PittsburghHave you decided to build a new home in the Pittsburgh area? It’s a great time to make the investment in this real estate market, and you will be thrilled with the results of creating your own custom spaces and amenities — as long as you ask the right questions when selecting a builder.

There are plenty of options in Western Pennsylvania when choosing a builder, and it’s no surprise that people can become confused and a little overwhelmed. It’s important to ask each prospective builder:

What kind of customer satisfaction feedback have you received?

Don’t just rely on the credibility of builder-supplied testimonials, take time to look at galleries of homes that they have built, and also visit properties in person, if possible. Find people who have used the builders you are considering and ask about their experiences. Also take the time to research each builder’s professional background.

How many people will I be working with on the design and construction?

Many homebuilders have their customers meet with a different person at each stage of the process – sales, design, and construction. That’s a lot of information for the average consumer to remember from one step to the next. And it means there are multiple chances for important information to be forgotten or muddled. Finding a builder who has one point person or coordinator to guide you through the process from beginning to end will make things simple and give you the time and confidence to handle major decisions about what you want in your new home.

What is included in the standard home design?

This is a big question. A good place to start is by looking at the builder’s sample or model homes, and ask about their library of floor plans. When you start looking for a home builder and you are sticking to a budget, make it clear to the builder what you are willing or able to spend on a home, and verify exactly what is included in a standard package. An initial price might look great to you, but then you find out later that features you expected to have in your house are available only as pricey upgrades. It pays to examine exactly what you are getting for your money, and to not be put off by standard home costs that seem higher than others until you have researched the finishes and features that each builder considers to be “standard”.

What locations are available, and what does each location offer?

You may have settled on one part of the Pittsburgh region for your new home, but it’s worth exploring with your builder all of the pros and cons of the locations available to you, including proximity to major traffic arteries, schools, hospitals and shopping centers. Other things to consider are community amenities, commute times, and future development in the area.

How much am I going to pay for a piece of property?

Ask prospective home builders to provide you with a range of prices for available properties.

How long does it take for you to build a home?

Most new homes can be completed in less than a year – some as quickly as 5 months. The builder you choose should be willing to work with you based on your own personal choices and needs, and not rush the project or drag it out.

Building a new home is a huge decision, and one you want to make without regrets. Choosing the right builder will give you peace of mind and satisfaction with your home, property and your whole neighborhood.

Pet-Friendly Paragon Homes: For the Animal Lovers in Pittsburgh

Pittsburgh is a great place for animal-lovers, and Paragon knows that they are important members of the family.

Owning a pet can be a rewarding and enriching experience — but sometimes, just sometimes, they can … well … practically destroy our homes.

That doesn’t have to be the case, though. In fact, you can have a house that’s both chic and pet-friendly with these tips for functionality and fabulosity as a pet owner.

Here are some ways to make yours a pet-friendly home:

  • Get your dog or cat their own bed. You can find pet beds that are stylish and comfortable, and that won’t be an eyesore. Giving them their own spot may also prevent pet hair in your bed or on your living room furniture.
  • Better Homes and Gardens suggests building a “pet den,”  stating: “Dogs do very well in crates or cozy closed-in spaces. The way you feel in your den is the way your dog feels in his crate: safe and relaxed. Push the crate under a table in a kitchen nook or in the basement—or build a little pet hideaway—and it won’t fight with your decor.”
  • Chic storage. Use a pretty basket or a cute bin to store pet toys.
  • Store smart. Keep glass vases, picture frames, and collectibles away from your pets. Be logical. An antique vase on the coffee table that your cat walks all over or a valuable sculpture that your Great Dane can knock over with the swipe of his tail isn’t smart storage or display.
  • Go natural. Opt for cleaners that have minimal or no chemicals. Try vinegar and water or all-natural cleaners instead of bleach.
  • Scratching posts. If you have a cat, buy a scratching post so that they don’t shred your furniture. In the meantime, aluminum foil on no-scratch-zones is a good way to discourage clawing.
  • Built-in pet dishes. Did you know that you can build your dog or cat’s food bowls into a drawer? Smart and less clutter!
  • Be cautious. Do your homework and research if houseplants and plants/flowers in your yard are poisonous to your pet.
  • Cut the cord. Hide or cut cords and tassels that hang from blinds, curtains, drapes, and blankets. Your dog or cat could get tangled up and put themselves in a dangerous position.
  • Make sure windows are secure. You don’t want your dog or cat leaping out an open window or jumping through a screen.
  • Build an attractive dog gate. A custom dog gate that you build yourself will match your home decor and look nicer than most sold at pet stores or chain retailers — plus, it may be more sturdy, too.
  • … or build an attractive crate. Who says dog crates have to be ugly metal and wire?
  • Build a pet agility course in your backyard. It’s fun for them, exercise for you both, and a great chance for you to bond!
  • Fence your yard. A fenced-in yard is a great option for pet owners.
  • Vacuum regularly to sweep up that pet hair.
  • Bathe and groom your pet regularly to help prevent shedding and odor.
  • Choose furniture wisely. Stain-resistant fabrics and material to which pet hair won’t cling are a great option!
Can you think of any other ways to make your home a pet-friendly household?