How does the process of obtaining a mortgage differ from buying an existing home to building my own?

Depends on how you go about it. Version 1 is you find a lot, you give the builder a little earnest money, and then close on the home when it is finished. Under this version, there really is no difference in loans. Version 2 is you find a lot, find a builder... Then go to the bank and get a construction loan. You pay interest along the way, and money is given out to pay people along the way. When the home is completed, you now get your long-term loan, like a 30-year fixed. I am right here in town if you need more assistance. www.Minneapolis-Mortgage.net

There are many differences, the biggest being that it's difficult nowadays to find a lender who will do a "Construction Loan"... most will require 30% or more of your own funds to be applied.. so for most folks, that's just too much out of pocket, plus from start to finish could be over a year before you actually get to move in. However the benefit is that with most custom built homes, your walking in the door with equity, since oftentimes, the completed appraised value is more than the cost to build. The easiest mortgage to get is on a home that is already been occupied, and is in good shape. You could literally move in within 30 days of an accepted contract.. so there are huge benefits to finding a home already built as well. Good luck. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Buy existing home. It is faster, and there are more loan programs available.

Completely different, it is a construction loan versus a conventional loan assuming we are talking under 417k. Construction loans are very time consuming, and then you have to close out that loan and/or roll it to your final loan post construction. If you are saving 10's of thousands of dollars in building costs then it might be worth looking into. But note Down payment options will be higher with construction loans as well as credit and income requirements. Please call a local mortgage broker from our panel of experts. Gun to my head buy from builder and use one of us to get you the best rate out there, before rates are back over 5%...

There are local builders who will carry the cost of construction financing for you; but it really is just rolled into the cost of the new home. We have access to lenders who will do your construction financing - issuing draws to the builder as the process continues - and then we put the final loan in place and pay off the construction loan. More than half of our monthly production is in new construction. Be sure you're working with a lender that has experience in this area. Give me a jingle if you'd care to discuss further.

There are many differences, and building is a complicated process...especially from the financing standpoint. There are not many lenders involved in construction loans in today's market. Many have a two close process, where you must convert the construction loan into permanent financing once construction is complete. Extended rate locks may be available to protect the borrower, but often times you are looking at locking in at whatever market rates are upon completion. Typically, you also need to put more into the transaction when building. The simplist, most easily manageable option is buying existing (or a newly constructed/finished) property. Having said that, it depends on your financial ability for down payments and credit worthiness. I hope this helps, and feel free to contact me if you have any further questions.Regards,Chris RobardsBranch ManagerAmerican Nationwide Mortgage Co277 Coon Rapids Blvd, 410Coon Rapids, MN 55433(P) 763-269-6175 (F) 763-220-7115NMLS 891343

The other answers are great from the financing point of view. The real questions you need to ask and determine answers for are if you are going to have a general contractor oversee the work, or if you plan to do it yourself -- in the former case you will be in line with the other answers provided; in the latter, you will have to provide the lender with information showing that you are qualified to do the job you are taking on. This adds another layer of issues to the financing program.Also, realize that you will have to keep paying rent, while you are beginning to pay for the property/construction of the new home -- unless you go out an find a development where they are building, and buy one of theirs and customize it -- in which case the financing is like buying an existing home.

We do construction financing for modular and manufactured homes and have done so for many many years... been in business since 1988. In fact, we were involved with financing the first LEED Platinum Certified green modular home in Seattle. Our factory built lending division HQ is based out of Woodbury, MN. Building with modular reduces your construction time dramatically, which reduces your costs many times. They are built indoors under controlled environments... and these days many designs can't be distinguished from stick built homes. In addition, the down payment requirements are less and we can do a one-time-close, and roll the construction loan into permanent financing at the end. Right up our alley! Give our MN office a call and tell them I referred you over. 651-203-0428

Your 2nd sentence is what I noticed and that is that you're looking for the "cheapest/best option". If you're referring to the cost to get the home completed then you're looking at the options of loan(s) and closing costs involved with them. If you're looking at the LONG TERM cost of the loan and the monthly payment involved... then you should look for the best loan (that you qualify for) for your "end loan". If you're looking at putting about 5% down... make sure that you educate yourself on the 4 options of Mortgage Insurance that are currently offered. Once you choose your "end loan" (if long term payments etc. are an important goal) then you find the construction process that will fit into that. You've got plenty of good ammunition to start asking the right questions with all your answers within the last 2 hours. Good luck!Steven Brand (that's me) is licensed in MN and WI and located between Mpls and St Paul at iLoan. StevenBrandHomeLoans.com 612.386.5306.

Good Question. My following answer is based upon my 35 years experience in the industry. In a normal market, you will get faster appreciation in a new built home, especially where you are building sweat equity. This is not a normal market. There are still great buys in existing homes. You can make them new by doing light rehab. This would be non-structural repairs. Kitchen, baths, flooring, woodwork, windows, etc. Rehab money is readily available. Construction money is not readily available. There is a shortage of new construction homes primarily because small builders have been not been able to come back in the market because of the lack of construction money. It would be even more difficult for a homeowner/builder. Timetables on new financing on existing homes is taking us about 21 days. A rehab loan will typically add a little bit of time on the front end as bids for work to be completed need to be finished before financing can be started. If I can help, don't hesitate to give me a call to discuss further. Dave Kosmecki 763.519.1100Good luck to you!