Residential Magazine

Get the Hammers Swinging This Summer

Brokers should become familiar with one-time-close construction loans

By Alex Elezaj

The thought of building a house from the ground up can feel daunting, especially for first-time homebuyers. But with the summer months approaching in a lower-inventory housing market, a construction loan may become a more appealing and popular option for borrowers.

Until recently, the wholesale mortgage channel has had limited access to new construction loan products. When borrowers were looking to build a home, they were often sent to their bank, where the process is generally much slower and more complicated. New one-time-close construction products on the wholesale market may make this a more attractive option for borrowers and the mortgage brokers who work with them.

“Many builders aren’t aware of the benefits a broker can provide beyond offering the new construction loan.”

Why are new construction loan products like this so valuable to the wholesale channel? They allow independent mortgage brokers to continue elevating the broker experience by providing clients with a faster, easier and less expensive process, no matter whether they want to build a house from scratch or purchase an existing home on the market. While they are niche products, these one-time-close construction loans are an important tool to have, particularly so brokers can offer as many options as possible for their clients.

Perfect solution

It’s important to keep in mind that in today’s market, borrowers may still be overpaying for a home or feeling discouraged about the market in general. This is where the guidance and expertise of an independent mortgage broker comes into play. The option to build a home could be a perfect solution to the challenges borrowers face today. They can build the exact house they want, set a specific budget and not have to worry about overpaying.

Unfortunately, there is a stigma around building a house. Many worry about lack of supplies or assume it will be unaffordable, but it’s up to the broker to debunk these myths for their borrowers. The truth is, supply chain issues have improved and homebuilders are back to near normal construction time frames, so a construction loan could be the solution for a client to get into their dream home.

Independent mortgage brokers are the experts and it’s up to them to be the voice of reason for their clients. The broker has the ability to walk their borrowers through the process every step of the way. This means they can help debunk any myths their clients have heard, making the experience as smooth and seamless as possible.

Understanding the product is key. Since these loans haven’t been widely available in the wholesale channel until recently, it’s important for mortgage brokers to take the time and truly become the expert so they can sell these products to borrowers, builders and Realtors alike.

Product perks

When it comes to homebuilders, many mortgage brokers assume that each construction company has its own in-house lender, so they tend to put relationships with them on the back burner. This isn’t always the case. While some may have an in-house lender, the majority don’t, and would therefore benefit from working with an independent mortgage broker.

It’s important to not only be able to sell the product but sell the perks of the wholesale channel as well. Many builders aren’t aware of the benefits a broker can provide beyond offering the new construction loan. Simply by partnering with someone in the wholesale channel, builders and borrowers can gain access to a more seamless experience with unmatched speed, state-of-the-art technology and service. It doesn’t hurt to mention that consumers save an average of $9,400 over the life of their loan when working with a broker, according to a recent study conducted by NDP Analytics for the Association of Independent Mortgage Experts.

Finally, when it comes to real estate agent relationships, this is a great opportunity to get in touch and bring them a product that is rare to see in the wholesale channel. New construction loan products will bring significant value to them and their builder relationships as well, which will hopefully result in an abundance of referrals.

Independent mortgage brokers continue to prove they are the fastest, easiest and least expensive way for a consumer to get a loan. The addition of these types of products is only going to keep more consumers in the channel for the long term to continuously receive the benefits of working with an independent mortgage broker.  ●


  • Alex Elezaj

    Alex Elezaj is chief strategy officer for United Wholesale Mortgage, a role in which he is laser focused on growing the independent mortgage broker channel. Prior to joining the company in 2018, Elezaj served as CEO of Class Appraisal Inc., which he led to become one of the nation’s largest and most successful appraisal management companies.

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