Reality Homes offers affordable options for building your new home
FIFE, Wash., Sept. 17 /PRNewswire/ — Troubles in the U.S. mortgage industry nationwide have caused many lenders to tighten their policies and curtail many of the creative financing programs so popular among homebuyers during the recent housing boom. This lending crackdown has left few options for those without large cash reserves, but at least one often-overlooked type of financing is still available in Washington and Oregon.
“People hear 100 percent financing and assume you are talking about the risky piggyback loan programs that have now gone the way of the dinosaurs,” says Reality Homes’ General Manager Pat Eppright. “The lenders we work with still offer a 100 percent financing option that is quite different, and remains an attractive option for those interested in a new home.”
Mortgage lenders traditionally require a 20 percent down payment, but during the recent housing boom, many homebuyers found they could borrow it by taking out a second or even third loan. According to one survey by the National Association of Realtors, up to 40 percent of first-time homebuyers bought their home with no-down-payment mortgages in 2005 and 2006. Lenders assumed that rising home values would allow the homeowner to sell or refinance if they had trouble making the payments. Home values have instead dropped for 12 consecutive months in most of the country and these popular piggyback loans have virtually disappeared. Home values in Washington and Oregon, however, continue to rise.
“Our program is unique because it teaches homeowners how to earn their equity by managing some of the early stages of constructing a new home,” Eppright explains. “The homeowner’s involvement and our proven track record combine to create instant equity, so lenders are willing to offer conventional mortgages with up to 100 percent financing before construction even begins.”
For example, one of Reality Homes’ more popular plans is a 2,135 square feet home that the company offers for about $99,000 or as little as $46 per square foot. In most rural parts of Washington and Oregon, you can find a nice parcel of land for under $80,000. Add an additional $25,000 for a building permit and other site improvements, and the future homeowner will need a total of $204,400 to build their new home.
To finance the entire package, mortgage lenders will complete a pre-construction appraisal and may determine that comparable new homes (e.g., similar types of construction, materials and finish, etc.) in the area are selling for $125 per square foot or $266,875. Lenders are still willing to fund up to 80 percent of a new home’s appraised value or $213,500, which is more than 100 percent of the amount needed in this example. In many cases, the lender can arrange a one-step loan in which the construction loan automatically rolls into a mortgage on completion of the home so no additional paperwork or approvals are required.
Companies like Reality Homes work regularly with lenders who can assist future homebuyers with the pre-approval, credit application and actual loan process. All of the lenders offer very competitive rates and closing costs.
About Reality Homes
Reality Homes Inc. is one of the largest builders of affordable homes in Washington and Oregon. The company specializes in building quality new homes on property purchased by its customers, and offers more than 25 customizable floor plans in sizes ranging up to 3000 square feet or more. Homes start as low as $38 per square foot and include generous standard features with numerous upgrades available. Future homebuyers can visit any one of its six locations in Burlington, Centralia, Fife, Sequim, Woodland or Woodburn, Ore. or online at http://www.realityhomesinc.com.
Pat Eppright, (253) 926-6822
pat.eppright (at) realityhomesinc (dot) com
Kevin Bush, (206) 443-9357
Firmani + Associates, Inc.
Kevin (at) firmani (dot) com
SOURCE Reality Homes Inc.
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