Dollars and Sense: Construction and Financing Options
Melissa Humphrey
grain falling into a container

 As printed in the latest edition of Michigan Farm News.

As I sit here looking at my thermostat that shows a frigid temperature, I cannot help but try to find things that make me think of warmer days.  As with the season, my mind wanders to those of you thinking about a new home construction project, major renovation or new home purchase.  

Before beginning your next construction project, it is important to find a lending partner that has a vast array of options to fit your needs.  These can range from variable to fixed rates, as well as both contracted and do-it-yourself construction loans. Look for a financial institution that is able to take care of all the loan details and construction draw processes and procedures so your time can be spent selecting the perfect cabinetry, flooring and paint colors.  

Another option to consider is a fixed rate loan. In today’s market, the interest rate continues to rise, by locking in your loan at today’s low rates, you can eliminate the risk of worrying about what interest rates could be in six or nine months when construction is complete.  This also offers you the convenience of a one-time closing, which will help reduce costs in the long run.

Another added feature that is available with select lenders is the ability to go up to a higher loan to value ratio, like 95 percent, on fully contracted new home construction and home purchases. This option could help you start your project sooner than originally planned and will allow some extra cash on hand for the upgrades you may select along the way. This product has a slightly higher rate than a typical loan that would require a minimum of 20 percent down, but allows wider options depending on your needs.

If you are looking to acquire land now and plan to build in the future, lenders will also finance home sites. Purchasing the land first allows you to gain some equity in your land that could be used when you are ready for construction. This type of option should not require a deadline of when you must build, and the interest rates can be fixed.

Whether you plan to build or buy, finding your partner in success is crucial to any financing project. Consider contacting a GreenStone financial services officer in your area to discuss the vast array of options that can help make your next dream home a reality.

Melissa Humphrey is a regional vice president of sales and customer relations for GreenStone Farm Credit Services.


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