Don’t make costly mistakes when you build your home. Builder Craig Meadows and his wife Karen Meadows of Meadows Homes share their real estate and homebuilding tips. Jo Garner, Mortgage loan officer takes you along the steps to choosing the mortgage that will work better for you and your family.
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Host: #JoGarner #MortgageLoan (901) 482-0354
Co-hosts: #CraigMeadows #karenmeadows #MSHomeBuilder #newhomerealtor www.meadowshomesofMS.com
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#MississsippiNewHomes #chapelhillsubdivision #onetimeclosingmortgage #constructionmortgage #constructionlending #custombuilder #realtor #homebuyer
LET’S GET STARTED…(Jo) (Good morning, Memphis! Welcome to our internet listeners and podcast listeners across the 50 states! . You’re on Real Estate Mortgage Shoppe. I’m your host, Jo Garner, Mortgage Loan Originator. You can connect with me at www.JoGarner.com. Our topic is: “Build Smart, Borrow Right-Tips from Your Homebuilder and Your Mortgage Lender.” Thank you to real estate attorneys Shelley Rothman and Rob Draughon of Griffin Clift Everton and Maschmeyer for sponsoring THIS episode of Real Estate Mortgage Shoppe. For your home purchase or refinance, contact attorneys Rob Draughon and Shelley Rothman at 901 752-1133.
Introducing Craig and Karen Meadows of Meadows Homes
We have in the Real Estate Mortgage Shoppe studio for the first time Craig and Karen Meadows of Meadows Homes. Craig, you have been in the home building business for many years. And Karen, you have been a realtor for a while now and currently are with Halloran Realty Group in Tennessee and Mississippi. You pride yourselves on producing a high quality product and fast build times. . You both started Meadows Homes in 2023.
You current subdivision is at Chapel Hill in Holly Springs, Mississippi
(Karen and Craig Meadows have about 1.5 minutes to intro themselves and talk about some of the services they offer.)
(Jo) Someone told me one time that if you if you know what you want in life and you still aren’t seeing it, build it. Being on the home building journey as a mortgage officer with my clients fun and rewarding to see their dream home take shape. But, don’t forget a VERY important component—getting the right financing.
As a mortgage loan officer, it is my job to ask the right questions to my mortgage customer and listen to help them find the right mortgage product that will meet their needs today but also serve them in years to come. The first step in settling on the right financing is for the borrowers to already know what is the maximum house payment they can comfortably pay on their budget. How much is the maximum they can pay down and still keep a healthy emergency fund?
Build Smart-Borrow Right -The Sunderland’s story
Let’s walk along with an example customer Sean and Sherry Sunderland. They owned their current home but wanted to sell it and build a home outside the city. It would take about seven to ten months for their builder to build their new home. They wanted to stay living in their current place until closer to completion date. But what if the contract selling their home did not go through? They could not afford to make both house notes over a long period of time. Sean and Sherry decided they would sell their home sooner, temporarily move in with family, and put most of their belongings in a moving pod that could be stored so they would not have to unpack twice.
What type financing would work best? Did the want to close once on their mortgage and just take the funds from the loan in draws as certain stages of the home got built? We explored this one-time closing loan. On the one-time closing loan, I would fully approve the Sunderland’s mortgage and they would close and the mortgage funds would be put into an escrow account to be disbursed in stages as each stage of the home construction gets completed.
The one-time closing is when an appraisal is done no the land and plans and specs so that everyone knows the value of the home. The mortgage company approves the borrower for the mortgage and it closes, even before the foundation is laid. The first draw would pay for the land, up to getting the foundation and framing completed. The next draw would be paid out for the next stage of the construction and so on until the house is complete. When the house is complete, the mortgage company calculates the full payment over the remaining months on the loan to include principle and interest, taxes and insurance. (if it takes 10 months to complete and the loan is a 30 year loan (360 months), the loan payment would be calculated over the remaining 350 months.
The one-time closing is usually good for if the borrower does NOT expects mortgage rates to drop down over the next 6 to 8 months. Also, if he or she choose to finance the mortgage payments during the construction phase so they are not stuck making two house notes. The one time closing helps you sleep at night because you do not have to requalify since you have already closed on the permanent loan. (Check with your lender in case you have a product that might require requalifying.) The one-time closing loan program can sometimes go as high as a 95% loan-to-value, requiring very little down payment.
The two-time close is when the mortgage company gives you a preapproval letter that you take to your local bank. The bank does the appraisal on the plans and specs and issues a temporary construction loan. The bank usually loans the borrower about 80% of the total value and the borrower pays a percentage of the loan amount as an origination fee to the bank. The borrower also makes monthly interest-only payment. So there is both an upfront and monthly cost to pay. When the house is completed, the mortgage company will step in and pay off the bank construction loan.
The two-time closing is usually good if the borrower sees they may make modifications as they build. The two-time closing is usually good if the borrower believes mortgage rates will go down over the time of their home construction. They can lock the rate closer to the completion date. Most construction lenders lending on the temporary construction loan don’t want to lend more than 80% loan-to-value, requiring the borrower to come up money to pay for about 20% or the total acquisition costs.
We can go over the two construction lending types later in the show. For now lets pivot back to Craig and Karen Meadows of Meadows Homes to check out some good words of wisdom.
(Jo) We have real estate attorneys Shelley Rothman and Rob Draughon give us the most up-to-date wisdom on real estate fraud and how to avoid being a victim. (Rob and Shelley have until the end of the first segment. To continue after we start next segment)
OUTRO: You’re on Real Estate Mortgage Shoppe. I’m your host, Jo Garner, Mortgage Loan Originator. What do YOU want to accomplish with YOUR mortgage? I can make the mortgage process EASY for you with the right mortgage. Connect with me at JoGarner.com When we come back, we will be hearing more Craig and Karen Meadow homebuilders
2nd segment 9:18 am – 9:30 am
2nd segment is after 9:15 break from about 9:18Am to 9:30 AM break
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TOPICS BY CRAIG AND KAREN MEADOWS OF MEADOWS HOMES
_____________ What to expect when building a home in today’s market
I.
A: Budget and cost overruns.
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Setting expectations with a preconstruction meeting
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Picking the right plan for your budget
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Dealing with unexpected expenses, hidden costs buyer may not be prepared for: ie Site work, tree felling, adding dirt or sand, erosion control etc.
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upgrades, resale value, prioritizing wants vs needs
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avoid decision fatigue by staying away from AI pinterest. boards, create a vision board that represents your style and stick with the continuity, price comparisons also help make the decision easier
B. Cost increases on materials
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Tariffs are affecting prices
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Lumber steep cost fluctuations
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Market effects that drive prices, ie. labor shortages, material shortages , seasons
II. Timeline and delays
A. Construction delays due to weather
B Labor Shortages
C. Material Backorders
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Adjusting from covid backlogs of 2021
D. Inaccurate timeline estimates
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Approvals and permits/plans/lender/inspections
III. Communication and Transparency
A. Picking the right builder-red flags
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Questions to ask when interviewing builders( experience, references, licensed, insured, completed projects etc)
B. Regular updates
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Setting the tone and gaining trust
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Frequent communication
C. Contracts/Warranties
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Builder contract should include time frame and budget expectation
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Draw Schedule
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Who writes the checks
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Payment due dates for completed phases of construction
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Liability and the responsibility of the homeowner to comply with builder’s terms of in regards to being on site during construction
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Specific terms in case of delays, contingencies and how to rectify
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Mechanical liens due to nonpayment
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1 year builder warranty for any construction defects, no warranty for homeowner damage or destruction( we come back at the 30 day mark to address non critical issues at one time. Then again at the 1 year mark)
IV. Inspections and Quality control
A. Regular walk throughs with builder at agreed upon schedule
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Inspectors must pass phased requirements for construction to continue
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Inspectors will not issue a CO for anything not performed to code
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Hire a private inspector if you have doubts about anything
B. Final Walk through/move in and beyond
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Punch list walk through, address anything that needs to be fixed, changed, repaired etc
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Check all faucets, water pressure, door knob function etc.
C. Maintenance on new homes
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Change air filters frequently for the first 6 months (construction dust etc. accumulates)
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Change Water filters frequently as applicable
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NEVER flush anything but toilet paper
V. Important points to touch on
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Builder’s risk insurance
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The importance of homeowners complying with builder liability policies to mitigate risk to all parties. ( not showing up on site during construction without builder present, refrain from directing the subs in any capacity without builder present, address any issues with builder, not directing communication at the subs, refrain from interfering with builder’s ability to execute directions and communication with subs.)
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3rd SEGMENT 9:35 AM-9:45AM)
TOPICS COVERED BY JO GARNER, LICENSED MORTGAGE OFFICER
Borrowing Right on Your New Home Construction Loan
Avatar picture of The Sunderlands
Earlier in the show we shared a story about the Sunderlands who wanted to build smart and borrower right on building the home they had always dreamed of having.
They owned their current home and planned to sell it early and move in with other family members so they would not have to worry about paying the house note on their current home.
Ms Sunderland said, “I want to know without a doubt that I have made the right decision on how to finance this new home.” Mr. Sunderland echoed her sentiments.
I invite our listeners to sit at my desk with me as we listen and assist the Sunderland’s in making the right decision on their construction funding.
Mr. Sunderland asked, “What is the difference between a construction loan and a regular mortgage?
Answer: The regular mortgage loan is funded all at one time at the closing table. The loan rate was locked and fully amortized with principal and interest, taxes and insurance payments at the beginning.
The one-time closing construction to permanent loan is different. It can be a loan amount as high as 95% of the land and cost to build. It is approved and funded at closing, but the full amount of the loan minus the first draw is deposited into an escrow account. As the home construction progresses, money is distributed to pay for materials and labor over the course of about 6 draws until the home is complete.
The borrower can opt to pay interest-only payments on the amounts drawn until completion. They might opt to not make any monthly payments until after completion of the home. The amount of interest on the money would be built into the loan amount. The mortgage rate can be locked in on an long-term lock agreement to protect the borrower from rates going up. At completion of the home, the mortgage company calculates the principle and interest pay back with taxes and insurance added over the remaining months left on the mortgage. A 30-year loan has 360 months. If it takes 10 months to build the payments would be calculated on the unpaid balance over 350 months.
The second method of funding a construction loan is to use a temporary bank loan for the construction phase. The banks usually lend only up to 80% of the cost of land and cost to build instead of up to 95% like on the one-time closing loan. The bank charges an origination fee –about 1% of the loan amount up front and interest-only payments are due each month until the home is completed.
Once the home is completed the mortgage company steps in and gives the borrower a permanent mortgage to pay off the construction loan. The borrower can lock in the rate on the permanent loan and have a fixed rate mortgage with a payment calculated over 30 years with taxes and insurance included in the payment.
Ms. Sunderland asked, “Which one construction loan method should we choose? We plan to be in the home a long time and want to keep our payments low.
Answer: If you have 20% or more of the cost to buy the land and cost to build, you would only have to finance 80% or less of the full costs, so you could choose either method—the one-time closing or the two-step method.
If you do NOT have 20% or more to pay into the construction project, then the one-time closing would be ideal.
If you believe mortgage rates will not go down and possibly will be going up, the one-time closing gets the permanent mortgage program locked in on the rate, eliminating the worry of mortgage rates going up during the construction of your home.
Mr. Sunderland says, “ We can qualify for both the one-time construction to permanent loan AND our current house note, but when we sell our home, we want to use the profit to pay down the construction laon so we don’t have a huge monthly payment.”
You can enjoy some flexibliity on both the one-time closing and two-step closing if you sell your current home before the new home gets built.
On the two-step closing, you can pay down the construction loan with profits from the sale of your current residence. When it is time to pay off the bank’s temporary construction loan, you automatically have a lower payment because the profit from the sale of your home is already applied.
On the one-time closing, you can enjoy the same flexibility but only if the profit you make selling your current residence is 20% or more of the unpaid balance on your one-time construction loan. We can lock the loan with a special provision for you to recast this permanent loan to have the lower payment once you prepay the unpaid balance by 20% or more. Now your payment is much lower, as if you borrowed the lower loan amount.
You get a lower payment either way.
(To our listeners, please check with your mortgage officer to get specific terms and restrictions based on the mortgage product you are using because guidelines can vary.)
Key Knowledge When Getting a Loan for New Construction
1. Getting Pre-Approved for New Construction
Special Benefits when you work with a builder using Jo Garner and the mortgage company where I am affiliated.
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Lender paid closing costs for new construction loans up to 1% of the loan amount not to exceed $5,000. Some restrictions apply for certain specialized loan products.
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Special time spent to find the right loan program for you the borrower
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Special tools and practices in place to help make the mortgage process easy
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Wide selection of loan programs which include traditional loan programs and also outside-of-the-box programs that create more loan closings
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How pre-approval works.
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What lenders look for: Credit, income, assets, and reserves.
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What the Lender Needs from You
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Key documents for construction loan approval.
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Working with the builder to get specs, blueprints, cost breakdowns, and timelines.
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Converting Construction Loans to Permanent Mortgages
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How loan conversion works.
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When interest-only periods apply.
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Locking in your permanent rate now vs. later.
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NO START LETTER Do not purchase materials or start the construction process until the construction loan lender has issued a “no-start” letter. This will help you avoid expensive title issues.
Let’s you and I talk about YOUR plans to save on your mortgage costs or your plans to build your real estate portfolio. But you have to talk with me personally so I can work with you. You can connect with me at www.JoGarner.com or call me directly at (901) 482-0354. MAKE YOUR PLAN, LET’S WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY!
MAKE YOUR PLAN. LET’S WORK YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, LET’S DO IT TODAY. I can make the mortgage process easy. Connect with me at www.JoGarner.com You can email me at Jo@JoGarner.com or call me at (901) 482-0354
REAL ESTATE TIP OF THE WEEK
Builder Craig Meadows and Realtor Karen Meadows offer a tip: (about 1.5 minutes)
Beware of Do-It-Yourself on building your house. There are too many details that go into building and financing a house to do it yourself.
Check out reviews on the builder you are considering to use for building your home. Talk to the builder to discover how much he or she listens to you. Beware of allowing a family member or friend build your home. Craig talks about some horror stories he as heard of someone trusting a family member or friend to build their home. A few forgotten details and the home owner ends up with a home only half way completed and no money left to finish it.
Jo Garner’s tip :
Do you want to buy a home and feel like you have some bragging rights on your mortgage? We can explore traditional mortgage programs and some outside of the box in-house mortgage products. By asking the right questions, you can feel good about getting the right mortgage to fit your needs today and in the future too..
What do YOU want to accomplish with YOUR mortgage? I have the knowledge and experience. Let’s look at traditional mortgage products, alternative mortgage products and even combinations of products. I can help you get you what you need and make the mortgage process EASY. Jo Garner, Mortgage Loan Officer 901 482-0354 www.JoGarner.com
ANNOUNCEMENTS:
Talk Shoppe equips with education, engages by offering connection opportunities between business people and empowers businesses in a supportive community. Talk Shoppe meets every Wednesday 9A-10A CT at Independent Planning Group’s conference room 110 at Clark Tower 5100 Poplar Ave 1st floor Memphis, TN
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MAKE YOUR PLAN. IF THE DEAL WORKS FOR YOU TODAY, DO IT TODAY.
Subscribe for weekly Real Estate Mortgage Shoppe podcasts with show notes at www.JoGarner.com
SPECIAL NOTE: REAL ESTATE MORTGAGE SHOPPE DOES NOT ENDORSE 100% OF THE CONTENT ON THIS EPISODE. REAL ESTATE MORTGAGE SHOPPE RECOMMENDS THAT YOU CONSULT WITH A FINANCIAL, LEGAL OR OTHER CERTIFIED, LICENSED PROFESSIONAL BEFORE ACTING OR INVESTING ON ANYTHING YOU HEAR OR SEE FROM THE CONTENT ON THIS SHOW OR BLOG POSTS. THE INFORMATION WE SHARE ON REAL ESTATE MORTGAGE SHOPPE IS GENERAL IN NATURE MEANT FOR GENERAL EDUCATIONAL PURPOSES ONLY, AND NOT AN OFFER TO LEND. EXAMPLES GIVEN FOR ILLUSTRATION PURPOSES ON REAL ESTATE MORTGAGE SHOPPE AND MOST ARE BASED ON TRUE STORIES BUT WE USE FICTIONAL CHARACTERS AND DO NOT DIRECTLY REFLECT REAL PEOPLE OR EXACT DETAILS IN ANY OF THE SITUATIONS. JO GARNER IS A LICENSED MORTGAGE LOAN ORIGINATOR. (EQUAL HOUSING OPPORTUNITY)
QUOTE CORNER:
“The building of a house is a strange blend of dreams and mundane work, and of heaven and earth.” Paul Goldberger
“I child proofed my house, but the kids still get in somehow” CoolFunnyQuotes.com
REJOINDERS:
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Leah Anne Morse of All Things New Organizing and Moving 901 488-9733
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Ed Hill of Masters Roofing 901 273-6495
- David Corwin, Deputy Director of Lender and Partner Activities, USDA Rural Development Single Family Guaranteed Program
Transitional Music: “The Ground Up” by Dan Shay ; “A Place Like That” by 6982 Motes and Jones Company; “Build A House” by Stefanie Heinzmann
(The song “A Place Like That” was composed and recorded by a group from North Mississippi called 6982 Sherry Motes Jones and Jamon Jones Find more at www.motesjones.com
PICK UP YOUR COPY OF “CHOOSING THE BEST MORTGAGE-THE QUICKEST WAY TO THE LIFE YOU WANT” by: JO GARNER
An essential guide for real estate professionals and their customers.
On Amazon and Barnes and Noble
ABOUT CRAIG AND -KAREN MEADOWS OF MEADOWS HOMES
901 620-7554 www.MeadowsHomesofMS.com
BIO: From the mid 1990’s Craig began working in the construction industry and always had an affinity for architecture and home building. However, the 2008 housing market crash led him to earning a business and engineering degree that took him all over the world in the oil and gas industry, for about 10 years.
But with 4 children he really wanted a career that kept him home with his family and with one he could build a legacy. Once the housing market began to bounce back he really focused his attention on home building. He prides himself on producing a high quality product and fast build times.
His Wife Karen of 30 years is a real estate agent with Halloran Realty Group in both TN and MS. She also is a real estate photographer. This dynamic duo started Meadows Homes together in 2023 and business continues to grow. The demand for custom new construction has been on the rise. In an ever changing market with costs increasingly rising it’s been important to them to find innovative ways to cut costs for their customers so everyone can have their dream home.
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ABOUT JO GARNER-MORTGAGE LOAN OFFICER:
www.JoGarner.com (901) 482 0354 jo@jogarner.com X @jogarner NMLS# 757308
(currently working with Everitt Financial dba Supreme Lending)
ONLINE LOAN APPLICATION : https://jogarner.supremelendingLO.com
“Whatever YOUR personal priorities are, my job is to help you get the mortgage terms that will give you bragging rights when you talk about it and help you score on hitting your goals .”
As a mortgage loan officer, my job is to help you get to the benefits you want from your financing terms. What is most important to you? I can help you find the financing terms that will help you get to what you want. What is your comfort level on a house payment? How much are you comfortable paying down,? What type of financing do you need to get the house you want to buy or refinance?
Different clients have different priorities in life—some are buying their first home with very little down payment funds. Some are recovering from medical challenges, divorces or preparing to send children to college and some are embarking on a long term goal of buying properties to build rental income.”
Jo Garner is a mortgage officer with extensive knowledge in helping her clients find the right mortgage program and making the refinance or home purchase mortgage process EASY. She offers conventional, FHA, VA or other loan programs for primary residences, second homes and investment properties.
Jo can help you look at rent vs buy, when it makes sense to refinance, how to get the best deal on your home purchase financing.
Jo Garner has been in the real estate/financing business for over 30 years. She grew up in West Tennessee and got her start in real estate in Portland, Maine where she first began her real estate career. She received her real estate education from the University of Southern Maine and was personally mentored in San Diego, California by Robert G. Allen, author of Nothing Down, Creating
*Wealth and The Challenge.
On moving back to West Tennessee in 1987, she went into business buying and selling discounted owner-financed notes secured on real estate. In 1990 Jo went to work for a residential mortgage company and has been a mortgage loan officer for over 30 years.
In addition to her work in the mortgage field, Jo Garner is the primary sponsor and founder of Talk Shoppe in Memphis. www.TalkShoppe.com Jo Garner also host the radio show Real Estate Mortgage Shoppe airing on News Radio AM 600 WREC and iHeart Radio with podcasts and show notes published on www.JoGarner.com Pick up Jo Garner’s book on Amazon or Barnes Noble “Choosing the Best Mortgage-The Quickest Way to the Life You Want”