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customization down the line. The electric, HVAC, and other systems are
built with an understanding of contemporary needs.
Foreclosures: Some buyers view short sales or foreclosures as an opportunity
to snatch up a great deal. However, these transactions are often complicated
and end up generating hidden costs and aggravation. Unless you are a
seasoned investor, many agents will advise against these purchases.

Building Your Dream Home

Financing a construction project
For home building, some lenders offer a special product known as a
construction loan. This is because the construction of a new house poses
a higher risk to the lender than mortgaging an existing home. These loans
typically have tight standards, with requirements for impeccable credit
scores and strict underwriting criteria. For this reason, it often pays to seek
a lender with experience in securing these types of loans.
Construction loans differ from standard mortgages in several ways:
‹ Usually, construction loans are short-term loans in which the funds are
released in stages, or “draws”, at different points in the construction
process—for example, before laying the foundation, before framing,
etc. Once the construction is complete, they roll over into conventional
mortgages with the house as collateral.
‹ During the construction stage, the interest is usually structured as
prime-plus, which is the prime rate (the rate charged by banks to their
preferred customers) plus a set amount; once the house is built, the loan
becomes a standard mortgage with a lower rate.

60 | 2020 Lakewood Home Buyer’s Guide