2024 Construction Loan Interest Rate Promotions

March 11, 2024
Photo of a Lexar home in framing for blog post cover

2024 Construction Loan Interest Rate Promotions

Navigating 2024 Construction Loan Interest Rate Promotions from Competitors in the Marketplace: A Closer Look for Savvy Home Buyers


Embarking on the journey of building your dream home is an exhilarating experience, and understanding the ins and outs of construction loan rates can make all the difference. Let’s dive into an extremely popular promotion you might have come across from one of our main competitors: the limited time financing offer with a low interest rate. Let’s unpack the details together! In this article, we’re unwrapping the complexities of a certain promotion floating around and guiding you through its intricacies with an eye on “construction loan rates”.


High Credit Score Requirement: Entering the world of construction loans, you’ll encounter a range of credit score demands. The promotion we’re dissecting calls for a lofty credit score of 760. This might make you pause — after all, the national average credit score sits comfortably at 718. It’s a number that’s been climbing steadily, but not quite reaching the heights required here. The industry sees the average FICO credit score in the 710s, with sources like Blue Water Credit and Upgraded Points echoing this statistic. This high bar set by the promotion is a formidable gatekeeper, potentially turning away many well-qualified applicants who don’t hit that mark.


Yet, don’t be dismayed. At Lexar Homes, we work hand-in-hand with lender partners who see beyond the numbers. They understand that life isn’t just about a score and offer solutions that are both accommodating and competitive. They’re not just lenders; they’re artists, creatively weaving through the financial tapestry to find a loan that fits the fabric of your life. The average credit requirement for a construction loan through most lenders, including many of our partners hovers in the 680 zone, with the sweet spot being closer to 720 — very aligned with the national average for homebuyers.


Substantial Loan Amounts: The grandiose loan amount assumption presented in the promotion — $726,200 — could be seen as a castle in the sky for many aspiring homeowners. It’s a figure that stretches beyond the bounds of necessity for a significant number of buyers, particularly when the national median home price is currently around $402,600. Rocket Mortgage and the National Association of Realtors (NAR) cite a median down payment of 13%, making the average mortgage loan balance $350,262. This stark difference from the promotion’s assumption lays bare a gap between what’s offered and what’s needed, especially when considering the cost of living in the Pacific Northwest, which our clients know all too well.


Loan-to-Value Ratio Challenges: A 75% LTV ratio? That’s a quarter of a home’s value needed upfront, a sum that can prove to be a high hurdle. It’s a challenge that can seem daunting in a market where preserving cash is akin to royalty. If a buyer were to indulge in the promotion’s lofty loan amount, the required down payment would be a princely sum upwards of $180,000. It’s a requirement that doesn’t quite fit the bill for the majority, whether it’s for maintaining emergency funds or for seizing other investment opportunities. This is not an. impossible feat to conquer, but it’s important to keep in mind when making your plans. 


The True Cost of Borrowing: Peeling back the layers of attractive APRs and monthly payments reveals additional costs that are not to be overlooked. The promotion’s advertised APR of 5.31% and monthly payment of $3,842.87 don’t account for the silent sentinels of homeownership costs — taxes and insurance. In Washington state, for example, homeowners insurance runs between $1,100 to $3,300 annually, while property taxes average $2,631 per year. On a monthly scale, that’s an additional $400 or so — numbers that can swell further based on your chosen locale. Our advice? Engage in a candid conversation with a lender who can paint the full financial picture, ensuring that your monthly mortgage canvas isn’t left with unexpected blank spaces.


Interest Rate Lock Fee: Ah, the 12-month interest rate lock fee of 2.5% — a cost that is easy to gloss over at first, but might make some buyers think twice later on. It’s a reminder that free lunches are rare, and this deal is no exception. Locking in a rate can come with a fee, although this practice isn’t universal. Some lenders serenade you with fee-free rate locks, while others may only ask for payment if changes are made. Understanding the nuances of these fees is crucial, as they can either be an upfront expense or rolled into your loan, echoing throughout the life of your mortgage.


Eligibility and Time Frame: The spotlight on primary residences and the ticking clock of processing fees and acceptance windows can turn the pressure up a notch. Our clients’ dreams come in various shapes and sizes — some are sculpting a primary residence, while others are crafting rental properties or vacation getaways. Lexar Homes is attuned to these diverse aspirations, ensuring our construction loan options aren’t one-size-fits-all. While all lending comes with a timeframe of one sort or another, some offer more more flexibility than others. 


Read the Fine Print: Terms and conditions are ever-shifting sands, and promotions are no strangers to change. It’s why we always encourage an early conversation with whoever you are looking to build with in advance to ensure the offer’s terms are still in harmony with your expectations. You just want to be sure to avoid the awkward moment of truth before you get too invested in the process. 


In Closing: At Lexar Homes, our symphony of trusted lending partners is ready to craft a suite of construction loan rates and solutions that resonate with your narrative. While we may not have a low interest rate promotion at present, we’re committed to orchestrating the best financing scenario for your homebuilding journey. We also build to a high standard down to the core of our product which is why we don’t offer steep discounts like many of our competitors do – we just aren’t willing to sacrifice on quality.


While promotions like this competitor’s financing offer seem very attractive, it’s important to understand all aspects so you can make an informed decision. So, if you’re intrigued by the prospects of an interest rate buydown or you’re dancing to a unique financial rhythm, allow us to accompany you. Discover more about Lexar Homes and let’s compose your homebuilding success story together. Contact us today to get started!

Disclaimer: Please note that Lexar Homes is not a financial institution or a lender, and as such, we do not provide financial advice. The information provided in this blog post is based solely on public data available and is intended for informational purposes only. We aim to share insights into construction loan rates and promotions based on our understanding of industry standards and our competitor’s publicly advertised offers. We encourage all potential homebuilders to conduct their own research and consult with a financial advisor or lender to understand fully the financial products that best suit their individual needs