COEUR D ALENE NEW CONSTRUCTION FINACNING OPTIONS FOR HOMEBUYERS | MORGAGE LENDER INTERVIEW

🏗️ New Construction Home Loans – Everything Buyers Need to Know!

🏡💰 Michelle René, Associate Broker with Tomlinson Sotheby’s Realty and founder of Destination Living, sits down with Matt Hague of Mountain West Bank to dive into the latest financing opportunities for new construction homebuyers in Coeur d’Alene and North Idaho. Whether you’re building a custom home 🛠️ or buying a builder’s spec home 🏘️, this video is packed with expert tips to help you save money, secure builder incentives, and understand the loan process from start to finish. 📌 Topics We Cover: 🔹 What is a construction loan & how it differs from a regular mortgage 🔹 Construction-to-perm loans vs. stand-alone loans 🔹 Builder incentives: closing costs, upgrades, flex cash 🪙 🔹 Interest rate buydowns explained – temp vs. perm 📉 🔹 Using the builder’s preferred lender – pros & cons 🔹 Tips for timing, rate locks, navigating contracts 🔹 Why now is a great time to consider new construction! 💡 If you’re a buyer in today’s high interest rate environment, this is your chance to learn how builders are making homes more affordable — and how to take advantage of those offers before they’re gone. 📞 Want more info? ➡️ Connect with Matt Hague at Mountain West Bank: https://www.mountainwestbank.com/pers… 🏡 Connect with Michelle René to explore Coeur d’Alene new construction homes: 🌐 https://destinationliving.co/about/mi… 💬 Drop your questions in the comments! 📲 Like & Subscribe for more real estate tips and expert interviews from the North Idaho market! 🔖 Hashtags: 🤔Thinking of moving to Coeur d’Alene, Idaho? Let us help!🤠 📱Call or Text: 208-699-5350📨 Email: [email protected] 📅 Let’s Zoom, reach out and we’ll set up a video chat. If you’re looking to move to the Coeur d’Alene Idaho, surrounding areas, or North Idaho area, be sure to give us a call, shoot us a text, send us an email, or schedule a Zoom call. We’d love to help you make a smooth move to the Coeur d’Alene, Idaho region which includes surrounding cities of Post Falls, Hayden, Hayden Lake, Athol, Rathdrum, Harrison, and Worley Area! ====== We get calls and emails all the time from people just like you, looking for help on making their move to Coeur d’Alene region and we absolutely love it.😍 Whether you are moving in 3 days or 3 months, give us a call☎, shoot us a text📝, or send us an email📨 so we can help you make a smooth move to Coeur d’Alene metro area, or North Idaho area. ====== Michelle Rene Tomlinson Sotheby’s Realty, Destinationliving.co 208-699-5350 Contact Us:👇👇👇 Full Channel👉👉👉    / @destinationlivingco   📱Call or Text: 208-699-5350 📨Email: [email protected] 📅Schedule a Zoom Call So We Can Meet by live video chat

Transcript

[Michelle Rene]
Hey there, this is Michelle Renee. I am here with Matt Haig. He’s with Mountain West Bank and I’m going to ask him to introduce himself in a sec, but I wanted to just share with you all.

I’m doing a series on various topics related to home buying in the Coeur d’Alene area. I’m with Windermere Coeur d’Alene Realty and I feel like this is going to be helpful for some people. So today, I asked Matt to join me and we’re going to talk about buying new construction homes and the lending related to getting a new construction loan.

So hi, Matt, take it away.

[Matt Hague]
Hi, how are you?

[Michelle Rene]
Introduce yourself if you would.

[Matt Hague]
I’m Matt Haig. I am with Mountain West Bank. I’ve been here about nine years now, so we’re just coming out of the higher interest rates.

We’re seeing them drop, but this is a perfect segue because we’ve been doing a lot of new construction and incentives and trying to combat the rates and things of that nature. So I think we’ll have some good info here for you.

[Michelle Rene]
Yeah, and it’s one of the things that I’ve been kind of harping on or sharing with people is there are some ways, even though it feels like the interest rates are holding some people back, obviously the prices have gotten high. And so when you put those two things together, it’s challenging for a lot of buyers to be able to pull the trigger. And at the same time, the FOMO is real.

There is a fear of missing out and it’s not unwarranted. If they’ve been waiting for a year, two years, it’s like, how long are you going to wait until you kind of move on to that next chapter of your life? So it’s a big decision, but new construction is one of the, I feel, is one of the ways that people can kind of get around some of these challenges and actually figure out a way to pull the trigger because of some incentives builders are offering and so that sort of thing.

But I want to get into the lending part of a new construction loan. So can you talk about what’s the difference in a new construction loan versus a traditional loan on a resale home?

[Matt Hague]
So on a new construction, in the very beginning, they’re going to be quite similar. It’s going to be the application, same as if you’re buying a home and closing in 30 days, because we legally have to have a credit decision within 30 days of an address being reported. So if you do find one and get pre-approved and make an offer, then we’ll go through the whole loan process up front.

And then basically we, I don’t want to say put it on hold, but we wait while the builder gets caught up. And then about 45 days out is when we will start updating the documents and making sure that everything is still the same as when we approved it initially. So in that aspect, it’s, you got to kind of wait and be very mindful of what you’re doing over the course of the build, because it isn’t just a 30-day process.

It’s typically a six to eight month process at that time.

[Michelle Rene]
Right. And can you talk a little bit about, so in our area here, you know, we have what I call production builders, building homes, there’s neighborhoods. And so that’s kind of one sort of loan, right, for that type of home versus, let’s say someone has either has land or the builder has land, but they’re building a, you know, $2 million custom home.

[Matt Hague]
Yes.

[Michelle Rene]
But can you talk about the difference between what those loans look like?

[Matt Hague]
Yeah. So the spec homes or production builders, those are quite a bit easier and they’re just conventional or FHA or however we want to do it. Custom construction is kind of a different animal.

There’s not many lenders in town that will do custom construction. We do have a full construction department that handles it. So basically what we have, we have one step or two step.

And so the custom construction, if you’re, if you own the land, we would use the equity of your land in the overall project cost and count that towards your down payment or minimum down that we have. So you have to have your builder approved through the bank and you have to have your plans and your specs and your price breakdown all completed as well. So those ones typically take a little bit longer to close.

60 days is pretty typical, but being that there isn’t a home there already, we have to have all that material as far as what the cost is to build it up front because we have to supply it to an appraiser to get appraised based on what it says on the paper and not something that’s already done. So that one’s kind of a different animal. We do arms on those.

So their adjustable rate mortgages, their still payments are based off of 30 years or 15 years, but we typically lock them for seven or 10 years. Interest rate difference on that is typically an eight. So not a huge difference.

And we give 12 months of interest only payments on the costs or on during construction. So we give a year to build and the payments gradually go up as draws are being taken by the builder. So that one’s quite a bit different than just the spec home.

Different animal, right? I’ll tell you.

[Michelle Rene]
So if someone walks into, again, this is like localizing to our area, we might have like an Arquitera neighborhood or Viking or Hayden homes or one of the production builders we’re talking about where they’re building the homes. And at some point in the process, sometimes it’ll be early on or maybe even at dirt when the buyer steps into the picture versus sometimes it’s the house is already built. It’s full spec.

Everything’s all done. But in both of those scenarios, it’s kind of the same situation or same loan, right? There’s not a two step.

[Matt Hague]
Correct. No. Yeah.

That would, we wouldn’t consider those custom, even though you get to pick your finishes and things of that nature, we would just update our contract accordingly.

[Michelle Rene]
Right. So that feels more like a traditional loan for the buyer. Right.

Yeah. Yeah. Yeah.

[Matt Hague]
Absolutely. That’s a, that would be, yeah, that’s one where we would update at the end and whether we go FHA, conventional VA, that’s, those are all going to be the same.

[Michelle Rene]
Yeah. Okay. And actually one thing we hadn’t talked about before, but as a realtor helping people buy new construction homes this has come up for me in the past is it’s actually a little bit of an insurance for the buyer.

If they’re getting a loan in working with the builder, because the builder has milestones or things that they have to do to perform in order to get that next payment. Right.

[Matt Hague]
Yes. Back to the on custom construction. Yes.

They, it isn’t, I’ve actually had clients that have done that just for that reason, because they’re not in the area at the time. And so what we do is when the, when the builder requests a draw, they have to list out what that draw is for. And when they come back to do another one, we actually have an inspector go out and make sure that the prior draw that those either material is there and up or that the work’s been completed.

So it is an insurance.

[Michelle Rene]
Yeah. It dawned on me because I had on the flip side of your, you being involved, you meaning a lender is involved. If it’s just a cash purchase, the buyer really has to be diligent about keeping track of, hey, builder, what are you doing?

Where are you in the process? A lot of times they want those progress payments directly from the buyer. Right.

[Matt Hague]
And so actually I’ve had somebody go straight through a title company. They didn’t need us. They were doing cash, but they wanted that security.

And so there was a local title company that decided that they would do that for them.

[Michelle Rene]
Yeah. Yeah. So anyway, I’m just pointing out that having kind of a third party or oversight on, you know, and it is helpful.

[Matt Hague]
Yes, absolutely.

[Michelle Rene]
Yeah. So, okay. Next topic.

I want to address our incentives. What kind of incentives are you seeing from builders?

[Matt Hague]
So every builder is going to have a different, and they change them up. I mean, just like we offer different incentives, but I’ve seen everything from finished garages to total exterior fencing and landscaping incentive, appliance packages, or just straight cash towards closing. So sometimes there’s end dates on those.

It just kind of depends. I know like in the wintertime it was, okay, we’ll finish everybody’s garage and make it because that’s where a lot of the furnaces and stuff are. So kind of helps protect that kind of stuff.

Fencing in a new neighborhood, if you buy a new home and it’s not offered for free, you could be.

[Michelle Rene]
That’s a big expense.

[Matt Hague]
Yeah. You’re going to meet your neighbors really quick and see if they’ll split it. And if they won’t, then you’re on the hook for it.

So that was a big one that one of our builders here did. And the other ones I’ve seen them to where they just, here’s a number. We’ll either take it off the cost of the home, we’ll offer it towards your closing costs, which you can then use to buy your rate down, or we’ll do some upgrades up to this level.

So there’s plenty of incentives. It just depends on what builder you’re using and what they’re offering at the time.

[Michelle Rene]
Yeah. And so what are some numbers that you’re seeing? Like if it’s just a flat number, I mean, I’ve seen everything from 5,000 to 20,000.

Yeah. Yeah. That was kind of my range.

I think the lowest I’ve heard is 2,500 or something, but it seems like 5,000 to 10,000 is pretty typical. Yeah. Yeah.

That’s a big deal for a lot of people. And if you’re a buyer out there and maybe it’s a little tight for you on your, whatever your situation is, your debt to your home, whatever, and you can get an extra 10 grand to purchase, whether you use that for, well, the purchase price. So the builders don’t like to lower the purchase price.

[Matt Hague]
They really don’t.

[Michelle Rene]
That’s their last. So explain that to people.

[Matt Hague]
Yeah. So they don’t want to do that as much. I’ve only seen it done once where it’s been taken advantage of and it really, it had some pushback to it, but they would rather do the incentive.

And it’s also more beneficial for the buyer to use that incentive to either get the upgrades if you’re comfortable with where your rate and everything is, or you’re actually going to save more by buying your rate down in almost every instance using that 10 grand as you would in monthly savings of putting, or putting 10 grand more down on a house. So it really, you can use those credits to help get your monthly payment in line.

[Michelle Rene]
Yeah. Okay. So let’s talk about the buy downs.

Explain, explain a typical scenario where let’s say the builder gives this $10,000 and the buyer can use it toward a rate buy down. Explain how that works.

[Matt Hague]
So there’s your permanent buy down, which means over the life of the loan, you’re going to have your fixed interest rate. So if you were going to get a, let’s say a 6.75 interest rate with a 1% fee associated to that, and you use your 10,000, let’s say you use your 10,000 and you, and you lowered your rate down to 6% or, or sorry, not, that would be pretty far. I’d say like 6.375. You’d have that for 30 years. That money is then collected at closing and never, never see that again. They also, there’s two one buy downs are something that I’ve done quite a bit actually lately. And that is you get qualified at the higher rate, but then you can use these credits and it starts an escrow account.

So for example, if you had a $400,000 loan and you started at 6%, if you did a two one buy down, your first 12 payments are going to be based off of a 4% rate. And then payment for year two is going to be based on a 5%. And then by year three, you’re at a 6%.

So that really, I mean, the cost of that is just shy of $10,000 on a $400,000 loan. But it saves you $500 a month in the first 12 and two or about 250 the second year. So also the nice thing is, is that if rates do drop down, say rates drop to 5% and you want to lock that in for 30 years, anything left in that bucket gets applied to your principal.

So you don’t lose it. Whereas on a permanent, if the same exact scenario happened, that money’s gone and you’d have another set of closing costs.

[Michelle Rene]
Okay. That’s awesome. So are you seeing a lot of that?

[Matt Hague]
Yes. We did a lot of that this last year because rates were up in the sevens. And so you still have to qualify at the higher rate, but you get some relief those first few years, first couple of years.

There is a 3-2-1 buy down. It almost doubles the cost though, just because of the spread of what it takes to do that.

[Michelle Rene]
Okay. So how common is it for the builders to do these incentives? Like are you seeing it on almost all the new construction deals?

[Matt Hague]
I am. There are incentives built into almost all of the new construction that I’ve worked with. It wasn’t a thing when the market was really hot, but as it slowed down and as prices have creeped up, affordability is something that the builders realize they have to help with in order to get their products sold as well.

And it helps everybody, honestly. Products are getting sold and people are getting savings.

[Michelle Rene]
Yeah. Okay. All right.

So I feel like some people might think, is there a catch to this? Why are they giving me $10,000? What’s the…

[Matt Hague]
Well, the catch is that if their houses aren’t selling or are too expensive, then they’re going to be sitting on those houses and then they don’t have the capital to reinvest and keep going. So it’s not necessarily a catch, but that is one of the reasons that these are being offered. And I think that it does.

It helps. It catches people’s eye. I mean, that’s a lot of money to get and use towards whatever you want.

And the mindset of most buyers right now are that rates will go down in the future and they can always refinance. So getting into something they like now is important.

[Michelle Rene]
Right. And what I’m finding is, especially if they’ve been waiting it out, thinking for a year or two, oh, I’m just going to wait until prices come down because the market’s going to drop. Well, it hasn’t.

[Matt Hague]
It has not.

[Michelle Rene]
It’s still up here and who knows? I mean, there’s all kinds of wackiness happening in the world and we don’t know what’s going to happen in the future. So I’m of the opinion like if you can make it work and make it make sense in your life, it seems like a wise decision to move forward.

[Matt Hague]
Yeah.

[Michelle Rene]
So long as it’s not…

[Matt Hague]
Yeah. If you’re in the house, the price isn’t going to go up and the rate can always go down, but you know what your cap is. If you’re doing a 30 year fixed or 15 year fixed, but you can always lower that rate if they are available.

If low rates come and there’s more competition, house prices could go up and then you’re paying the same, but you have a lower rate, doesn’t necessarily help because you’re borrowing more. So…

[Michelle Rene]
But also a little add on to that is if the rates go down and the competition is more, guess what? These incentives are not…

[Matt Hague]
They’ll go away.

[Michelle Rene]
They will go away, right? The builder is only going to do those incentives and actually sellers too. Like right now on a resale home, the buyer can make an offer and ask for things that they might get right now that won’t be the case if…

[Matt Hague]
Won’t be that way in the future if… Yep. Absolutely.

[Michelle Rene]
That’s a real thing. So that’s why I was saying that FOMO is real. Yeah.

[Matt Hague]
Oh yeah. Yep. Yeah.

And it’s one of those, if you miss out, then who knows if and when it’ll come back. There’s things that I see that I haven’t seen before and vice versa. So…

[Michelle Rene]
Yeah. So I know Mountain West Bank works with some builders and you might be considered their preferred lender, right? Is there an advantage or should someone, a buyer be suspect of working with the builder’s preferred lender?

[Matt Hague]
Um, the only… There’s only been a couple of instances where a preferred builder and… Or the builder had a preferred lender and they didn’t offer their incentive unless you used their preferred lender.

So in that case, I’d be a little suspect because you are pigeonholed into whatever that lender’s offering. You may get the incentive, but it may be getting… The rate might be higher than what you would be getting if you weren’t using the incentive.

So that would be the only catch I’d watch out for. But as far as being a preferred lender, it’s typically has to do with relationships in the community. So if you’re working with a trusted bank or lending institution, there really shouldn’t be a catch.

You should always at least look and see that you are getting the best deal. I don’t… I wouldn’t say go apply at three or four different places because you get your credit hit every time.

But yeah, to ask around is certainly a responsible thing to do.

[Michelle Rene]
Sure. Okay. Can you talk about locking in the rate?

So, you know, I mean, obviously we’re recording this at a certain period of time. The rate is whatever it is today. It could go up, it could go down.

How… Especially with new construction, let’s say, you know, it is in the beginning stages when someone goes into contract, they’ve sat in your office or, you know, gotten pre-approved. And then it’s not, you know, for eight months later is when they’re actually going to close on the deal.

So talk about how that works and how do they navigate that.

[Matt Hague]
So that’s one of the things that is just kind of lingering out there throughout the whole process. When we’re within 90 days, we can certainly lock it out. Obviously, the less time that you are locked, so 30 days, 45 days, 60 days, 90 days, the least amount of days, the less you’re going to pay in fee to get a rate.

So between 30 and 45 days is kind of that sweet spot of really diving in and seeing what rates are doing. If they’re absolutely going crazy and skyrocketing, then that’s a problem. And you’d look into maybe locking the rate in sooner.

But that would be the gamble of new construction, honestly, is that you’re just kind of subject to what that’s going to be. I know that there are… We offer it.

It doesn’t make financial sense, in my opinion, to lock it out for a year. It costs so much and you’re not guaranteed that the rate won’t be that in a year. It’s nothing that I’ve ever…

I’ve offered it, but I’ve never been taken up on it just because the fees are so expensive to lock it in for a year or eight months, whatever it may be. So that would be one thing. Yeah.

I mean, you are subject to what the market is doing. So that’s one thing where… But you’re getting everything you want and handpicked from the builder.

And that’s, again, where circling back on the incentives, you can use those kind of in your back pocket to get you where you need to be.

[Michelle Rene]
Yeah. Okay. Okay.

So do you anticipate with these incentives… I know we talked about this a little bit already, but how long do you expect them to last?

[Matt Hague]
So I’ve seen them… I’ve seen some go away completely. It just kind of depends on the builder again.

But I would say as rates, which they are trending down right now, and as things start moving and heating up with the spring, I don’t foresee them sticking around for a super long time. They’ve been around longer than I would have thought they would be. But also, the market hasn’t picked up and gotten extremely hot.

But it has certainly lowered them where it used to be everybody was offering 10 to 15 grand. Now, maybe it’s an appliance package or 5,000. So they are lowering.

I mean, bottom line is that the builders, if they don’t have to give money away, same with sellers, if you don’t have to, then you’re probably not going to. So as things continue to get better around here, or there’s more product and more competition, those will potentially go away.

[Michelle Rene]
Okay. So let’s say someone finds one that has, you know, it’s a really high number. Let’s give the $20,000 example.

Can the buyer use that, you know, a portion for the closing costs and a portion for the rate buy down? Or maybe they’re willing to, the buyer willing to also put money in toward the rate buy down? Can you like mix and match those funds?

[Matt Hague]
Yeah, as long as it’s okay with the builder, then we can use them however makes most sense. And we would just get an addendum if there was a low, if you lowered the purchase price, we’d get an addendum for the new purchase price.

[Michelle Rene]
Well, I don’t really mean lowering the purchase price because I feel like that’s not really beneficial for the buyer or the builder, right? The builder has their incentive and they want to keep the market price of their product, their inventory at a certain number, but the buyer, it doesn’t really benefit them much, right? It doesn’t.

[Matt Hague]
Nine times out of 10, it does not benefit them as much as using that credit all towards lowering the costs. So whether that be your out-of-pocket closing costs or doing an interest rate buy down, you can, if you’re not putting 20% down, you can potentially do a one-time payment on private mortgage insurance. So you don’t have that in your monthly payment.

There’s plenty of ways to spend that money.

[Michelle Rene]
Okay. Okay. Good.

So you answered the question. You can use a portion toward rate buy down or close costs or whatever.

[Matt Hague]
Okay. Yes. Yep.

[Michelle Rene]
Awesome. Awesome. Did I miss anything?

Is there anything that you want to make sure people are aware of?

[Matt Hague]
I don’t think so. I mean, a shameless plug for us is that we try to do some incentives as well and other lenders do in town too. So again, it’s working with who you like to work with and take advantage of all the incentives that you can.

We just were running a March Madness one with a half percent up to $2,500. And I’ll just say it’s free money, but it really is that you can use it towards whether that’s $2,500 out of your, if you’re buying, that’s $2,500 less than closing costs that you got to come up with. So every little bit helps right now to get into the house.

And once you’re in, you’re in, you get to start reaping the benefits of the market continuing to grow and instant equity in that sense. So the rates can always change and they’re going to go up. They’re going to go down, but as long as you can get in, that’s the key.

[Michelle Rene]
Yeah. Okay. Well, that’s awesome.

So they can use your incentives or the lender, whoever the lender. And in your case, you’re saying that recently this was a $2,500 credit. So that in addition to whatever, to whatever the, to the, yep.

Yeah. Okay. Awesome.

Yay. So people get in touch with you if they want to get some numbers from you or apply.

[Matt Hague]
Absolutely. Yeah. Yeah.

Give me a call. Shoot me an email. We’ll get our info on here and we have, it’s super easy.

We’ve got an app. We’ve got an online application, face-to-face, whatever, whatever works. I work within town and out of town.

So custom construction, raw land, you name it.

[Michelle Rene]
Okay. Awesome. Thank you, Matt.

I really appreciate you taking the time to do this. I think it’s going to be helpful for people and maybe, you know get rid of some of the confusion that people have about new construction and, and getting a loan for a house.

[Matt Hague]
So absolutely.

[Michelle Rene]
All right. Cool. Thank you.

[Matt Hague]
Thanks.

[Michelle Rene]
Bye.

[Matt Hague]
Bye.