Imagine stepping into a home that’s been tailored to your every need. Each room reflects your style and every corner is designed with your family and lifestyle in mind.
Building a home offers this level of personalization, something you simply can’t find in an existing property. Even better –– when financing a home under construction, you gain the unique advantage of financial flexibility — giving you control over mortgage rates and timing, so your investment works for you.
At McArthur Homes, we’ve been helping homebuyers in Utah turn their visions into reality with quality craftsmanship and a smooth, customer-focused building process.
What Is Financial Flexibility in Home Financing?
When we talk about financial flexibility, especially in the context of financing a home you are building, we’re referring to the ability to adapt to changing financial conditions.
This primarily revolves around your mortgage rate. Interest rates fluctuate and the rate you lock in affects your monthly payment and the overall cost of your loan. By having the flexibility to secure a mortgage rate at the right time — anytime during the construction phase — you can protect yourself from potential rate hikes or take advantage of a drop in rates.
How Financing a Home Under Construction Works
Financing a home that’s under construction follows a slightly different path compared to buying an existing home.
First, buyers secure the lot and select their floor plans and upgrades. Then, as the home is being built, buyers must secure a mortgage. While the process is largely the same, the timing of the rate lock provides additional flexibility.
For a completed home, buyers often lock in their mortgage rate when they make an offer. With a new build, however, you have the option to monitor interest rates throughout the construction period, giving you more control over when to lock in.
The Benefits of Rate Lock Flexibility
The real magic happens with rate lock flexibility.
Let’s say you decide to buy a new home in October, but the house isn’t scheduled to be completed until January. This three-month window allows you to track interest rates and lock in your mortgage when rates are most favorable.
If you lock too early, you may miss a potential drop. On the flip side, if rates rise, you could be looking at a more expensive mortgage. By locking in at any point during the construction process, you can find that sweet spot, saving you thousands over the life of the loan.
How Interest Rates Can Fluctuate During Construction
Interest rates can change significantly even within a few months.
That’s why it’s so important to monitor the market while your home is being built. Rates are influenced by factors like inflation, Federal Reserve policies and global economic conditions.
For example, if rates are trending downward, it might make sense to wait a bit before locking in. Conversely, if you notice rates starting to rise, you may want to lock in sooner to avoid a higher monthly payment. This strategy could result in substantial savings.
Why This Flexibility Is Important for Homebuyers
Having options is always a good thing, especially in a volatile financial market.
Rate lock flexibility allows you to adapt to market conditions, helping to ensure that you get the best possible mortgage deal. Over time, locking in the right rate could save you hundreds of dollars on your monthly payments and thousands in interest over the term of your loan. That’s why this financial flexibility is such a valuable asset for homebuyers.
Tips for Managing Your Financing While Your Home Is Being Built
To make the most of your financial flexibility, here are some of our top tips to consider
Consult With A Financial Advisor
They can help you understand market trends and guide you on when to lock in your rate.
Keep A Close Watch On Interest Rates
Monitor changes in the market so you can act quickly when rates shift in your favor.
Stay in touch with your lender
Communication is key. Regular updates from your lender will keep you informed on your options and any changes to your rate lock window.
Making the Most of Financial Flexibility
The journey of building your home is as significant as the final product itself. Financial flexibility during the construction phase empowers you to make strategic decisions that align with your financial goals.
By monitoring interest rates and securing the most favorable terms, you can ensure your new home is not only a reflection of your personal style but also a sound investment for your future.
Ready to build your dream home with flexibility in mind? Contact McArthur Homes today to explore financing options and start planning your custom home. Our team is here to guide you through every step of the process!
