We recently hosted a Construction Financing 101 webinar featuring Tayt Ianni, Senior Mortgage Loan Consultant and Construction Loan Specialist at Kinecta Federal Credit Union, and TJH homeowner Andrew D’Amico. Kinecta is one of our preferred lenders and has partnered with us for the past four years. Dustin Abanto, National Vice President of Sales Operations for TJH, moderated this discussion about construction loan financing from the TJH Design Studio in Aliso Viejo, California. Find out the answers to your burning questions covered during the webinar.
What options are available for financing a new TJH home?
Many homeowners believe the myth that construction financing is expensive. They think they’ll have to pay “prime plus a margin,” which could equate to around nine percent today. They also think that the loan is temporary and they’ll have to pay it off immediately when construction is complete.
However, this is not always the case.
Tayt explained that Kinecta Federal Credit Union provides an all-in-one construction-to-permanent loan. That means they close the loan upfront, and after the home is complete, they refinance at a lower rate or convert the loan to a permanent loan without any additional qualifying or fees.
TJH preferred lenders use the home’s future value to determine how much they’ll lend. Our experience as the nation’s largest single-lot home replacement builder allows us to provide an accurate construction budget even before the home is built, which can make the qualifying process easier.
Kinecta’s construction-to-permanent loan, which is available to homeowners who will occupy the home or use it as a second home once it’s complete, is a fixed-period traditional ARM product. As a result, it’s not a temporary loan tied to prime. As homeowners make draws to fund building their TJH home, Kinecta will slowly increase the loan and their payments.
Homeowners receive monthly statements stating how much of the loan has been used to fund their build, which explains their payment amount for that month. There is no prepayment penalty on Kinecta’s construction-to-permanent loan.
Kinecta uses a third-party fund control company for added reassurance during the build process. We obtain the necessary funds directly from fund control, and Kinecta sends inspectors out to make sure the work is finished at each stage of the process.
Our preferred lenders in other divisions offer TJH homeowners similar loan options. Processes and programs are subject to change per the division’s preferred lender.
Having done deals with Thomas James for four years and having homeowners call me at the end and send pictures, I have the unique perspective to be able to say that they have such a good team behind them, and we all work together to make sure it’s a smooth process.
—Tayt Ianni, Senior Mortgage Loan Consultant and Construction Loan Specialist at Kinecta Federal Credit Union
What are common homeowner lending mistakes to avoid?
According to Tayt, one of the biggest mistakes that a homeowner could make is getting into the process of building a new home without knowing enough about the loan process.
Our preferred lenders, such as Kinecta, help homeowners avoid this through communication. They work hard to answer questions that prospective homeowners have and make sure they understand the information. Homeowners are welcome to have their financial planner join them on calls.
Tayt said most people leave their initial call understanding the mechanics of the loan and feeling comfortable with the process.
What I love about Thomas James Homes is that their team is so large with professionals to answer questions—I really just try to keep up with that level of service. We want to make sure that you’re really clear on the process and you’re really comfortable with the process.
—Tayt Ianni, Senior Mortgage Loan Consultant and Construction Loan Specialist at Kinecta Federal Credit Union
What’s the first step in getting a construction loan for a TJH home?
Our Private Client Group will get you in touch with the preferred lender that works best for your needs. The lender will provide you with all the information necessary to understand the details of construction financing and weigh your options.
What about rates?
Tayt said credit unions can often provide a better set of jumbo underwriting guidelines than banks. Kinecta and many other lenders offer relationship discount programs that allow homeowners to lower their interest rate by taking advantage of other financial products, such as CDs and private banking.
He said homeowners who are “in love with this Thomas James product” are continuing to choose to build and finance after looking at all the numbers involved. In fact, December 2023 and March 2024 were record months for Tayt, even with higher interest rates.
If rates increase while the home is being built, TJH homeowners that borrow from Kinecta don’t have to worry about a rate hike because their rate is locked in. The loan can simply convert to a permanent loan without any extra qualifying or fees. Other preferred lenders generally offer similar benefits.
How long does it take to secure financing?
Tayt said the process typically takes around 45 days, but stressed the importance of getting your loan officer a full package of information as soon as possible.
What’s it like to be a TJH homeowner?
TJH homeowner Andrew said their family chose BUILD by TJH because they adored their neighborhood, and it allowed them to stay in the location they loved while also gaining the space they needed after having a second child. He said they made the decision following years of looking at homes that were available to buy at a comparable price.
Andrew would “triple down” on his belief that BUILD by TJH is a great opportunity for homeowners who love where they live. He said it’s an easy pathway to a high-quality new home. The excitement he and his wife experienced about their new TJH home after talking with Tayt and fully understanding the loan process was “through the roof.”
I was truly impressed by the construction and the quality of the homes that I saw when I toured other Thomas James homes. It gave me a lot of confidence knowing that there were very strict timelines about when things were going to be done, and I wouldn’t have to search out and manage my own general contractor who could extend timelines forever, which I had seen a lot of my friends go through.
—Andrew D’Amico, BUILD by TJH homeowner
What was it like working with a TJH preferred lender?
Andrew said he was concerned that they wouldn’t hit their necessary appraisal value when talking to other lenders, but fortunately his TJH sales associate got him in touch with a TJH preferred lender, and the introductory call put him at ease. The appraiser’s value allowed the process to move forward quickly so construction could start.
Kinecta Federal Credit Union and Thomas James Homes are not affiliated. Membership requirements apply. NMLS (Nationwide Mortgage Lending Service) ID: 407870. Subject to credit and property approval. Rates, program terms, and conditions are subject to change without notice. Not all products are available in all states and for all loan amounts. Other restrictions and limitations may apply. The actual terms of the loan will depend upon the specific characteristics of the loan transaction, the applicant’s credit history, and other financial circumstances that may apply. Not an offer or solicitation to sell real property. Thomas James Homes is a registered trademark of Thomas James Homes, LLC. ©2024 Thomas James Homes. All rights reserved. AZ DRE License LC700513000. CA DRE License #02057367. DEN Home Builders, LLC #LIC00250546. TJH SEATTLE LLC. License #:2101251. General Contractor: SEA HOME BUILDERS LLC. License #: SEAHOHB806DO.
