New Construction Loans

Buying a home may require a mortgage, but building your dream home requires a different type of mortgage – a construction loan. New construction loans can help pay for home building or renovations and work differently from traditional loans. We’ll delve into what you need to know about a construction loan and how it works. 

 

What is a new construction loan?

A construction loan is a short-term loan that covers the costs of work and materials for new-build homes. Some of the items you can finance with a construction loan include permits, contractor labor, roof framing costs, and many other expenses that come with building a house. 

 

Types of New Construction Loans

Construction lenders provide different types of loans for a variety of homebuilding scenarios. Here are some financing options when building a new house:

 

Construction-to-Permanent

Also known as “single-close” construction loans, this type of loan converts to a permanent mortgage after construction is completed. The benefit with construction-to-permanent is that there is only one set of closing costs to pay, reducing your overall fees.

 

Construction-only

Construction-only loans are also referred to as “two-close” construction loans that require closing on two different loans. The first loan is taken out for the construction. Once work is completed, the loan is paid off with a new loan, called an end loan. The end loan is based on terms locked-in as the home nears completion. 

 

Renovation Construction Loan 

If you want to upgrade your existing home instead of building one, you can look for a renovation loan. This type of loan comes in various forms depending on the amount of money you’re planning on spending. 

 

How Construction Loans Work

As mentioned previously, new home construction loans work much differently from the typical mortgage loans. The lender pays the loan to the contractor, not the borrower, in installments. Once the project has been completed, construction loans can be either converted to permanent mortgage or paid in full. 

 

How to get a Home Construction Loan

Before applying for a loan, the borrower should meet with the designated contractor to understand the total cost to build so a  loan amount can be established. The lender will then review a borrowers’ employment history, savings, income stability, and ability to pay back the loan. A property appraisal will also be obtained to support the value of the project. To qualify you will need an excellent credit score, stable income, low debt-to-income ratio, and a down payment of 20 percent. 

 

How to Find a Lender

It is important to find a lender who specializes in construction lending and isn’t new to the process. Research several lenders to obtain detailed information about their background and specific programs. We recommend that you compare construction loan rates, terms, and down payment requirements to make sure you’re getting the best deal possible. 

 

Protect your Home from Termites

Termites have been around for millions of years. While the insects are small, they can cause major damage to the structure of homes. Since they work from the inside out, the destruction begins without you knowing it. Cindy Mannes, vice president of the National Pest Management Association, said,

 

“Termites cause more than $5 billion in property damage in the U.S. annually, which is typically not covered by homeowners’ insurance.”

We know this sounds scary, but don’t worry! There are numerous things you can do to prevent termites in new builds and existing homes. As you prepare complete spring home maintenance tasks, make sure you add in preventative measures against termites and other insects. 

 

New Homes

If you are building a new home, termite prevention begins with the foundation. Termite mesh, a termite barrier, and concrete can be packed beneath a house, making it impossible for termites to pass through the ground and into the house. Pressure-treated wood is also highly recommended for termite prevention.

 

Existing Homes

Homeowners can take measures to prevent an infestation in existing homes as well. Create a barrier between your home and the ground, so only the concrete foundation of the house touches mulch, plants, and soil. The siding should begin at least 6 inches above the soil, making it difficult for termites to reach. 

 

Tips to Protect against Pests

  1. Reduce moisture in and around the home.
  2. Repair leaky faucets, pipes, and exterior HVAC units.
  3. Repair rotted roof shingles. 
  4. Replace weather-stripping around windows and doors. 
  5. Check to ensure gutters and downspouts divert water away from the house.
  6. Inspect your home throughout the year for evidence of termite waste, patterns in wood, or mud tunnels leading up the house. 

You can also get a yearly inspection completed by a pest professional, who can treat both the yard and structure of the wood, should there be evidence of termites. 

The trick with termites? Prevention! Take the time each year to check for signs of termites so you can get ahead of any damage they may cause. 

How Builders are Responding to Changing Times

Connecticut, like many states, has deemed construction as an essential business. Builders and developers have quickly adapted to make worksites and client interactions safe for all. 

According to a recent survey of NAHB members, several measures are being implemented that allow the construction industry to continue to build and sell homes. 

The majority of those who responded stated that non-construction employees are working from home during these times. Also, instead of open hours for tours, 59% of those surveyed are scheduling private showings. 

Though not mentioned in the survey, many builders are also implementing virtual options. At the Residences at 66 High Street, interested parties can either schedule a private showing (two people per showing), or a virtual showing. We are able to utilize technology to best fit the needs of every individual. 

Even with an essential business status, not all construction jobs have continued. Of those surveyed, 48% have halted construction projects, or will do so in the near future. Fortunately, however, only 25% have needed to lay off or furlough workers. 

At The Horton Group, we continue to make adaptations and follow CDC guidelines so we can continue to move forward safely. 

 

What is a HERS Index?

There are plenty of ways to make your home more energy-efficient. As homeowners, you know that with every scheduled maintenance and every home purchase, there are ways to save energy, money, and have a more sustainable household. 

With all of the options available, it can be overwhelming to sort through what will help your home run more efficiently, and what isn’t necessary. That is where the HERS Index can help.

What is the HERS Index?

The Home Energy Rating System (HERS) Index is the nationally recognized system to assess a home’s energy performance. 

HERS scores are designed to calculate the energy efficiency of new or remodeled homes. If you are in the market to buy a brand new home, the HERS score will give you an idea of the energy costs for the house.

How do you find out the HERS Index Score?

A certified HERS Rater can determine the HERS Index Score of your home. They will complete an onsite energy rating of the home, and then compare the data to a reference home. The reference home is an analysis tool designed to resemble the actual house in size, shape, style, environment, and climate. 

What does the score mean?

The HERS Index ranges from 0 to 150, with 0 being a home that produces or conserves as much energy as it uses. While a score of 0 is unlikely, the lower the score, the more energy-efficient the home.

The standard new home typically has a rating of 100, while the typical resale home has a score of 130. Using these scores as reference points, you can get an idea of how efficient your home is. 

How can I improve my home’s HERS Index Score?

The greatest energy expenses in a house are for heating and cooling. Whether you are remodeling your entire home or just looking for a way to save on energy costs, you can get a programmable thermostat, upgrade your HVAC system, or simply get an annual tune-up to make sure it is working properly. 

Other energy-saving tips include: sealing all air leaks, add insulation, upgrade to ENERGY STAR appliances, and consider installing solar panels

A HERS index rating can help you determine what type of fixes will be most beneficial for your home. 

 

Builder Confidence Reaches 20-year High

If you are in the market to buy or sell a home, you may have heard that at the end of 2019, the national inventory declined by 9.5%, according to realtor.com

What does this mean? With fewer homes on the market, and buyers actively searching for their next house, experts predict inventory will remain low into 2020. 

It also means that builder confidence levels are breaking records.

National Association of Home Builders/Wells Fargo Housing Market Index

Every month for the past 30 years, the National Association of Home Builders (NAHB) conducts a Housing Market Index survey. This survey gauges builder perceptions of current single-family homes sales and sales expectations for the next six months.

The last two monthly surveys – December 2019 and January 2020 – have the highest confidence levels for builders since 1999. The confidence level reached 76 points in December and decreased by just one point in January. To compare, builder confidence in January 2019 was 58 points. 

What does this mean?

With low inventory levels, low mortgage rates, and a strong labor market, builders are going into 2020 with high levels of optimism. 

NAHB Chairman Greg Ugalde said,

“Low interest rates and a healthy labor market combined with a need for additional inventory is setting the stage for further home building gains in 2020.”

Builders are prepared to tackle the problem of low housing inventory, particularly for single-family homes and starter homes. Buyers who are frustrated with a lack of housing options can work with builders or search for new development projects in the area. 

Are you considering building in 2020? Contact us today!

 

 

Design-Build vs. Design-Bid-Build

You decided to build.

Do you know what type of build process you want to commit to?

Beyond choosing the right builder, you need to understand how the builder will complete the scope of work. Two methods are design-build and design-bid-build. We go over the differences between these two processes below. 

Design-Build

With design-build, the owner signs just one contract with the builder (or project manager).

Often, design-build companies have their own team to handle all aspects of the project, including design, construction, and all trades. With this type of construction process, the owner has one point of contact, making it easier to communicate. 

The contractor can also hire subcontractors for trades as needed, though they resume all responsibility for the finished project, cost, and schedule. 

Design-Bid-Build

Design-bid-build is the more traditional model in construction. Design and construction are handled by two different companies, with two separate contracts. 

Where does the bidding come in?

First, the design team works to complete a set of construction documents for the project. From there, various contractors can submit bids for the project. Usually, the work goes to the lowest bidder. This can help to ensure the cost of construction will stay low. When communication between all parties is strong, this process is effective. 

When completing new construction, it is most important to feel comfortable with who you are working with. From there, you can discuss the type of building process that best fits your needs. 

 

Recycling Construction Materials

Sustainability and green living is becoming more evident in homes and workplaces. It’s one thing to create a green finished product; it’s just as important to make the construction process environmentally friendly. 

Construction & Demolition Materials

Many of the materials used in construction can be recycled. Construction & demolition (C&D) waste comes from building and tearing down houses, buildings, roads, and bridges. C&D materials can be recycled in the following ways:

  • Concrete rubble can be reused in new projects. 
  • Wood can be recycled into mulch, compost, animal bedding, wood pellets, and more.
  • Gypsum drywall can be recycled into new drywall, in the production of cement, and as an additive to composting operations.
  • Asphalt can be recycled an endless number of times, as it never loses quality.
  • Metals can be sent to metal scrap yards and reused.

Additional materials that can be recycled include glass, cardboard, and paper.

Many C&D materials can be reused. During a demolition or remodel, items that can be reused in new projects should be removed carefully before tearing anything down. Items that can be reused include:

  • Doors
  • Hardware
  • Appliances
  • Lighting fixtures
  • Windows
  • Brick and masonry
  • Excess insulation
  • Paint
  • Packaging materials 

Benefits of Recycling C&D Materials

In 2015 alone, 548 million tons of C&D debris was created, with 90% coming from demolition, according to the United States Environmental Protection Agency. Recycling construction materials has both environmental and economic benefits. 

When recycled materials are used, the consumption of natural resources is decreased, saving energy. By reusing materials, less waste goes to landfills. Since landfills are filling quickly, it often costs more money to dispose of materials than it does to recycle them. This can help to reduce the building project expenses. 

Whether recycling of reusing materials, planning is essential to fulfill rules and regulations. Local recycling centers, landfills, and waste departments all work with construction companies to reduce waste and achieve green building practices. 

 

What is Market-Rate Housing?

Market-rate housing is a term that confuses many people. With the announcement of our development project with Davenport Properties, we want to take a look at what this means for the teachers and community of Springfield, Massachusetts.

Housing Affordability

For housing to be considered affordable, it means you spend 30% or less of your total income on housing. This leaves you with 70% of your income to spend on additional bills, food, transportation, and savings.

Many people, especially in larger cities, are spending more than 30% of income on housing. In the case of teachers who work in cities, the cost of housing is often an issue. 

HUD offers affordable housing options throughout the country for people and families who spend more than 30% on housing.

Market-Rate Housing

Market-rate housing means that rent is set at a rate that is comparable to other housing units in the area. New construction is costly, which means that new housing developments frequently come with high rents. 

In the case of Willy’s Overland Redevelopment Housing Initiative, Davenport Properties and partners of the city of Springfield wanted to create market-rate housing catered to teachers and welcoming to millennials and baby boomers. 

As we build 60 new units in this first building, we are focusing heavily on the building amenities and making each unit functional for the people who live there. These brand new housing units will feature the quality and design that The Horton Group is known for. Knowing that the city of Springfield is dedicated to making this market-rate project affordable to those living there makes the project even more meaningful. 

 

How Drones are Changing Construction Sites

Drones are becoming increasingly popular at construction sites. These small, easy-to-maneuver cameras are controlled from a remote on the ground. They are proving to be useful during every stage of construction, from mapping out a worksite to monitoring safety and timelines. 

Construction sites are large areas where a lot of people and machinery are coming in and out daily. Missing even one detail on the job could cause complications for weeks. Communication, attention to detail, and timeliness are essential to making sure a build happens correctly and on schedule. Drones are being used on construction sites to aid in the process. 

Design and Pre-Construction

When planning to build on a new site, it is necessary to survey the land and prepare plans for the build. Drones quickly and accurately survey the job site. This cuts out surveying tools and human error, which means drones can save both time and money in the initial stages on construction.

In addition to surveying, drone photography gives a clear birds-eye view of the land, which you can use to map out the site. Project managers can then use this real data and merge it with the virtual design of the project. This can help owners visualize the project, making it a useful tool when bidding on a project or explaining your vision to your client. 

During Construction

During construction, drones can collect data to see the progress of the build. Again, this can be useful when meeting with clients to discuss the phase of development. In addition, it helps the project manager to stay on track with the schedule. 

When equipped with streaming video, drones make it possible for the project manager to monitor the work site from another location. Management can instantly communicate needs based on video happening in real-time. This decreases delays that occur when workers need an answer, or a project manager notices an issue that needs to be resolved. Video streaming with drones also allows managers to track materials on the site and acts as a 24-hour surveillance system, keeping the worksite safer. 

Inspections

Rigorous inspections can be done almost instantly with drones. These small flying cameras can fit pretty much anywhere, without the need for workers to climb to the roof or below ground. Flying a drone to one of these hard-to-reach areas of the structure saves time, gives a close-up view, and eliminates safety concerns.

Project Completion

Once the project is complete, drone photography and video can show a timelapse of the build from start to finish (as long as the entire project was streamed). Giving your client aerial views of the full project can help with marketing and show the entire site in one photograph. 

Drones, along with other advanced technology, continues to change the construction industry, helping to make worksites safer and more efficient.

 

4 Benefits of One-Level Living

One-level living does not mean cramped living quarters. In fact, a one-level floor plan lends to an open flow, high ceilings, and can easily provide space for all of your needs – without the need to go up and down the stairs. 

Accessibility

Accessibility is the most significant benefit to one-level living. With everything on one floor, the struggle of ascending and descending the stairs is eliminated. Whether you have a toddler in the house, elderly in-laws staying with you, or plan to retire in the home, one level is easier and safer to navigate. 

At The Residences at 66 High Street, The Whitfield and The Leete feature one-level units, with elevators that go from the parking garage or lobby up to each floor. 

Open Floor Plan Options

Open floor plans continue to be the most sought after design in homes. An open flow between the most used areas of the home – the kitchen, dining area, and living room – creates a feeling of connection. This holds true whether you are hosting a party or preparing a meal for your family.

With everything on one level, designing an open floor plan comes naturally. There is no family room in the basement or loft on the second level that becomes the gathering space. 

Increased Energy Efficiency

Single story homes usually have a floor plan that air naturally flows through. The HVAC system required for a one-level residence is more sustainable and generally less expensive than what is needed to heat and cool multiple levels properly. 

Easy to Maintain

Both the interior and exterior of single-level houses are easier to keep clean and maintain. Inside, your cleaning supplies and laundry room are on the same floor, which means you do not have to carry items up and down the stairs while cleaning. The exterior is also easier to maintain, whether you are power washing the siding, cleaning the windows, or clearing out gutters. 

With more people aging in place and staying in their homes throughout retirement, one-level living is becoming more sought after. Are you considering moving to a one-story residence? Contact us to discuss floor plan options. 

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