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San Diego downtown real estate broker

Bob Schwartz, CRS, GRI 

Certified Residential Specialist



San Diego, California 92101

Telephone - Cell:
(619) 300-8819

(619) 229-0048

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The Truth Behind New Home Construction Financing


Construction of a new home can be a really great experience for anyone. However, with the construction comes the question of finance. New research indicates that most loan originators have little experience in terms of home construction loans. In fact, around 10% of loan originators give out more than one construction loan per year.

When seeking out a loan to finance the construction of your new home you should ask the loan originator the following questions: exactly how many construction loans do they approve per month, what are the sources of their funding, and do they have any respectable references. Also think about doing a little research on your own using the internet. While researching online, be aware that many online applications for home loans are actually lead generators and are not actual applications for home loans. Many online mortgage applications will collect your personal information and sell it to a third party.

One reason that most loan originators are inexperienced when it comes to lending out new construction home loans is because of the inherent difficulty of issuing such loans. When a loan officer is reviewing a new home construction application, they must consider a wide variety of factors including: the ownership status of the land where the home will be built, whether or not a general contractor is involved, soft and hard construction costs, and how much work has actually been started.

Unfortunately those are only a few of the things that must be considered, there are many, many others. Knowing this, it is perhaps not all that surprising that loan officers only issue an average of one new construction home loan per year. The average home loan actually has an estimated thirty-five people involved in the origination of that loan. With a new construction loan the number of people involved with the origination of the loan may be substantially higher.

Securing proper financing for your new home can be a pain to say the least. If you are certain that a brand new home is the only way to go, you want to think about purchasing a home located within a subdivision. Home builders who build homes within subdivisions are notorious for being easy to work with. Because the home builder and the lender are either one in the same or closely linked, securing financing for a new home within a subdivision is typically much easier than get a hold of a loan independently.

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