Local residents gathered in downtown Orange City on April 1st for the American State Bank “Dream to Build” event, a seminar designed to demystify the custom home-building process. The event brought together bank lenders, insurance agents, and local contractors to provide a comprehensive road map for attendees looking to transition from current homes to new constructions.
The Financial Foundation
Navigating a construction loan differs significantly from a standard mortgage. Panelists explained that the process often begins with a pre-qualification to determine a budget before moving into detailed bids. A key takeaway for many was the management of “deferred interest,” where interest accrues on the loan throughout the build. Homeowners must decide whether to pay this interest monthly or include it as a balloon payment at the end of the project.
Timing and Partnership
One of the most critical elements discussed was the timing of the build. Experts noted that a typical construction loan currently spans nine months, though weather and supply chain factors can influence that timeline.
Beyond the Blueprints
The event also covered often over-looked costs such as:
- Lot Acquisition: Typically not included in the builder’s price
- Landscaping and Appliances: Generally handled outside the primary construction loan
- Change Orders: Upgrades made during the build can lead to cost over-runs that the homeowner is responsible for
For those not ready to build new, the bank also highlighted home equity lines of credit (HELOC) as a way to finance major renovations on existing properties.
