FHA Construction Loans in 2019: A Borrower's Market?
February 12, 2019
Are you thinking about an FHA One-Time Close construction loan to help build a home especially for you rather than buying an existing property? Or are you more interested in buying a new construction home and not an older type of property? House hunters in either category may find 2019 to be a good year to explore home loan options.
Why? Increases in home inventory, slashed prices on new construction homes, and other factors are partly responsible according to several published reports including data from Zillow.com.
Some sources point to a lower demand in recent times and higher interest rates contributing to an environment that saw the last quarter of 2018 go out with home price reductions on new construction as many as 25% of the available houses in the market’s “inventory”.
Price cuts on new homes don’t automatically translate into lower construction costs for One-Time Close mortgages, but it’s a comparison worth making depending on your housing market.
Major housing markets including Dallas, Seattle, and San Francisco saw new construction home price cuts in the 30% range. That’s 30% of the housing market inventory, not 30% off the price of the home. Any price reduction is a good one, especially when it applies to a big selection of the available homes in a given market.
But that might not be enough to lure some house hunters or first-time home buyers away from the One-Time Close construction loan-these borrowers place a higher priority on having the home built to their specifications. And an FHA mortgage loan can let you do that even as a first time borrower.
Even in a housing market where price cuts aren’t as widespread or as steep as some, the FHA construction loan or new purchase loan can be a big advantage for those who have not purchased a house before.
A first time house hunter and loan applicant will appreciate the comparatively lower 3.5% down payment requirement for qualified borrowers AND the ability to get family or friends to help with the down payment.
And a recent Fed announcement that interest rates would not be hiked at this time could add a twist to the home loan environment in general. When the Fed made its’ announcement on Wednesday, January 30, 2019, rates fell to three-week lows. Whether that trend persists or not remains to be seen, but it does make for an interesting environment to purchase your first home in.
Talk to an FHA lender today about a construction loan or a new construction purchase. You will be glad to know your options in this area should you choose to start your journey to home ownership soon.
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Why? Increases in home inventory, slashed prices on new construction homes, and other factors are partly responsible according to several published reports including data from Zillow.com.
Some sources point to a lower demand in recent times and higher interest rates contributing to an environment that saw the last quarter of 2018 go out with home price reductions on new construction as many as 25% of the available houses in the market’s “inventory”.
Price cuts on new homes don’t automatically translate into lower construction costs for One-Time Close mortgages, but it’s a comparison worth making depending on your housing market.
Major housing markets including Dallas, Seattle, and San Francisco saw new construction home price cuts in the 30% range. That’s 30% of the housing market inventory, not 30% off the price of the home. Any price reduction is a good one, especially when it applies to a big selection of the available homes in a given market.
But that might not be enough to lure some house hunters or first-time home buyers away from the One-Time Close construction loan-these borrowers place a higher priority on having the home built to their specifications. And an FHA mortgage loan can let you do that even as a first time borrower.
Even in a housing market where price cuts aren’t as widespread or as steep as some, the FHA construction loan or new purchase loan can be a big advantage for those who have not purchased a house before.
A first time house hunter and loan applicant will appreciate the comparatively lower 3.5% down payment requirement for qualified borrowers AND the ability to get family or friends to help with the down payment.
And a recent Fed announcement that interest rates would not be hiked at this time could add a twist to the home loan environment in general. When the Fed made its’ announcement on Wednesday, January 30, 2019, rates fell to three-week lows. Whether that trend persists or not remains to be seen, but it does make for an interesting environment to purchase your first home in.
Talk to an FHA lender today about a construction loan or a new construction purchase. You will be glad to know your options in this area should you choose to start your journey to home ownership soon.
------------------------------
RELATED VIDEOS:
Get Your Questions Ready for Your Loan Officer
The Last Part of the Transaction Is the Mortgage Closing
Know What You Can Borrow With Prequalification
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