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3 Reasons Why Building Your Next Home Could Be Better than Buying

Frustrated by low existing home inventory? Consider building a home to your specifications with the support of a Zions Bank one-time close construction loan.

Ali Hardy Mar 6, 2019

Burgeoning real estate markets like Boise and Salt Lake City are experiencing a major growing pain recently — low existing home inventory. As prospective buyers go on the hunt for a new home, they are finding far less to choose from compared to recent years.

According to U.S. Census data, Idaho and Utah are among the top three states in the nation in percentage of population growth from 2017 to 2018. As population swells in these states, the pressure on existing real estate is becoming a real frustration for those looking to buy.

In Idaho, home inventory has decreased more than 64 percent in the past year statewide, according to Redfin, a national real estate brokerage. Low inventory has also impacted cost, with the median sales price for a home in Ada County — Idaho’s most populous county — jumping from $235,000 in January 2017 to $303,000 in December 2018, a nearly 30 percent increase in just two years.

With current inventory in short supply, many buyers are choosing a different route: building a home. Although sometimes considered the slower and more expensive option, it doesn’t have to be. 

If you’re planning on building rather than buying, consider saving both time and money with a Zions Bank one-time close construction loan. The phrase “one-time close” refers to the fact that the lot purchase, construction and permanent loan are all included in one home loan transaction. This means there is only one set of home loan closing costs and loan documents.

Jeremy Holmgren, regional sales manager for Zions Bank Home Finance, offers the following three reasons to apply for a Zions Bank one-time close construction loan.

Zions Bank Mortgage Area Manager Jeremy Holmgren
Zions Bank Mortgage Area Manager Jeremy Holmgren.

Reason #1 to apply for a Zions Bank one-time close construction loan: Lower down payment

Construction loans typically require a 5 percent down payment for loans within the conforming limit, which is currently $484,350. Often, land equity helps buyers meet this minimum requirement, reducing or eliminating the need for cash at closing, Holmgren explains. If the land hasn’t been purchased yet, you’re able to buy the land and build the home, all in a single transaction.

Reason #2 to apply for a Zions Bank one-time close construction loan: A single closing

The one-time close construction loan program provides a fixed-rate, interest-only payment during construction. Upon completion of the home, borrowers have two options — a permanent 30-year fixed mortgage for loans within the conforming limit, or an adjustable-rate mortgage on jumbo loans — all approved and completed as a single closing.

Only those funds drawn from the construction loan are charged interest, Holmgren explains, and only the outstanding balance becomes a permanent, fixed-rate loan. If the money is not drawn, it is not charged interest.

Reason #3 to apply for a Zions Bank one-time close construction loan: Interest rate certainty

Another advantage to this process is that it provides borrowers with interest rate certainty from the start, which is especially beneficial in an environment where home loan interest rates are subject to change.

“You can get your rate locked in now and get started building your home,” Holmgren says. “Although rates seem to be stabilizing, this helps borrowers since they won’t be subject to any interest rate increases that can take place between the time construction begins and when it is completed.”

Ready to get started? Contact a Zions Bank mortgage loan officer today to learn more about new home construction loans and get current home loan rates.

Loans are subject to credit approval. Terms and conditions apply. See a banker for details. Equal Housing Lender. NMLS #467014.

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