What Should I Consider Before Building a New Home?

Building a home doesn't have to be overwhelming. Knowing what to expect will help simplify the process.

What's your budget?

To know your budget, you should contact a mortgage professional about construction loans. Together you can determine how much you'll be able to spend.

Keep your household budget in mind, too. You may not want to borrow as much as the lender is offering—you'll need room for other monthly expenses after you move in.

Where do you want to build your home?

When you're choosing a lot, look into its zoning. Local ordinances can affect the type of home you can build, where you can build it, whether you can have additional structures, and more.

If you already own your lot, good news: You can use it as equity when you set up your financing.

Who is your builder?

You'll need a licensed builder to get a construction-to-permanent loan. Be sure to verify their licenses, check references and speak with them about your plans. By vetting the builder, you'll increase your comfort level and decrease your exposure to legal complications.

Incidentally, BB&T requires homeowners insurance that includes builder's risk coverage. This helps protect you while your home is being built.

What kind of loan do you want?

BB&T offers construction-to-permanent loans for new home construction and renovations.

With a single closing, you can buy your lot, pay your builders and convert to a permanent mortgage after your home is built.

Ask your loan officer about the best fixed-rate and adjustable-rate options available for you.

When do you lock in your interest rate?

Our construction-to-permanent loans offer a huge advantage: you set up your loan details up front. You'll have the security of knowing your interest rate before the up to 12-month construction period begins.

How much will you spend during construction?

After paying closing costs, you'll only pay interest on the amount of your loan you've used to date. If you change your building plans during construction, you'll need to pay for cost overruns. Although your loan amount cannot be increased at this point, we can try to help you find a solution.

What happens during construction?

  • Your builder will have scheduled draw payments for completed work
  • You'll have four-to-six inspections of the home as it is being built

When can you move in?

After the final inspection, you'll receive your certificate of occupancy. Then you're all set to move in—and since the home is complete, your loan will convert to a permanent mortgage.

Keep it up. You're getting smarter about home buying.

Related topics

The Pros and Cons of Owning a Home  (Article)

Before buying a home, think about how it will impact your financial situation and lifestyle.

What Should I Know About a Construction-to-Permanent Loan?  (Article)

If you're planning to build a home, understand your options and the specifics of permanent loans.

Loans, lines of credit and credit cards are subject to credit approval.

All BB&T mortgage professionals are registered on the Nationwide Mortgage Licensing System & Registry (NMLS), which promotes uniformity and transparency throughout the residential real estate industry. Search the NMLS Registry.

Consumer Handbook on Adjustable-Rate Mortgages coming soon.

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