S5, E3: In This Economy? Funding Your Dream Home Construction

SEASON SIX, EPISODE THREE PODCAST TRANSCRIPT

TRISHA: [00:00:02] You're in that middle of building, and then all the sudden you're doing like this electrical walkthrough and you're like, ‘oh shoot. I didn't think that I wanted this little hub in my mudroom that everybody could come in.’ It's good to have a contingency because you might want to add something that you hadn't considered originally. So if you don't have a contingency, I don't have extra funds to advance for those unknowns.

INTRO: [00:00:29] Welcome to the Art of Custom from Hibbs Homes. [00:00:33] In this episode, Trisha McConkey with Associated Bank returns to the podcast for her fourth time. She is here to provide more tips and tricks for funding your dream home in this wild economy. Enjoy [00:00:47]

KIM: Before Barbie can start building her Dream House, or if you prefer Ken's Mojo Dojo Casa House, they have to consider how they're going to fund their projects. Figuring out how you're going to fund that construction investment and securing the right lot to build on are the first steps in the process. But they also tend to be the most unclear, especially for those who have never built a home before.

I'd like to flow right on into the conversation we're going to have about funding your dream house project Melody, but I've got to give you some props on, again, the introduction that you wrote. Ken's Mojo Jojo Casa House? Let me guess you just recently went and saw the new Barbie movie.

MELODY: Absolutely, and I'm planning to go back next weekend. And I have to say, you brought some great Kenergy to that opening.

KIM: I get what you did there. That's awesome. But no, this is a, we're having some fun, but that's a serious subject because quite frankly, you can't design and then hope to build your dream house - even Barbie - unless you really understand the finances and the financial component behind it.

MELODY: Well, and you add the recent headlines with the Fed and interest rates and all those increasing. And, you know, you might be thinking your dream home vision is more relegated to Barbieland than it is for the real world.

KIM: So you really enjoyed the movie,

MELODY: I absolutely did, I absolutely did. I was a glam, Barbie girl growing up.

KIM: Through and through. So I've got to admit my daughter, she’s 24, went and saw it and she really liked it as well.

MELODY: Well, good, I'm glad.

KIM: So, anyway, getting back to the subject at hand. This is a very important subject because we do need to talk about the financial component of building. There's a lot of uncertainty with these interest rates

MELODY: People shouldn't be putting their plans on hold. I talk to everybody who comes through the door, basically, unless they come through a referral. And I hear a lot of people saying that, maybe we should put it on hold. And I expect probably not to have the phone ringing quite as much, but I think everybody should hear what Trisha McConkey from Associated Bank has to say about it before they make the decision to put things on hold [00:03:04]

KIM: Trisha, It is always nice to have you a part of the podcast. You're now a veteran. We figured out this is the fourth time you've appeared on our podcasts. That means you bring great information and information that our listeners can certainly use when it comes to thinking about how to finance their dream home.

TRISHA: Yes, absolutely. We were just chatting and I still have clients that will contact me and say, hey, I listened to you on the podcast, going all the way back to the first one.

KIM: Tell us a little bit about yourself. For those of you who may not be familiar with Trisha, we'd love to know a little bit about your background.

TRISHA: Absolutely, I currently work for Associated Bank and I'm a loan officer with them, but I specialize in construction and renovation lending. I've been with them for 15 years and in the mortgage industry for 26.

KIM: The timeliness of this conversation is there because on July 26 the Fed announced another rate increase. And of course any time there's a rate increase, people don't know what to expect. So talk a little bit about the psychology, especially related to the residential construction industry, when it comes to these interest rates and there was just another rate increase.

TRISHA: So actually, with this last rate, and then indicating that potentially there could be one more still. This last one we were anticipating. And when I say “we” I'm talking about most lenders in general and in the financial markets. We were anticipating that. So really I have not seen a change in rate. It was something that was really built in, we anticipated it was to come. So you know it's already in there and when clients call, you know they are nervous, ‘okay, are we at 8 today?’ So you know it's nice to just be able to say, well we've anticipated it. It's something we've kind of already seen in the rate here recently and that they're really relatively the same as last week.

KIM: And what's interesting is I found that whenever there's a rate increase it seems like people do take a little bit of a pause. Maybe our phones don't ring quite as much, but it doesn't last very long. I think people understand that despite where mortgage rates are today, they’re still historically much lower than some of the highs that we've seen, like if you go back into the 80s. I think people start putting that into perspective a little bit and understanding that it's really not a bad time to think about building a new home because I can always go back and refinance when the rates do back off and come down a little bit.

TRISHA: Yes, that's absolutely correct. My conversationS with clients are that the price to build, the price of materials, those are not going to come down. Those keep going up.

So while the rate is higher, yes the market ebbs and flows, it actually ebbs and flows more than it used to like back in the 80s. So you know you can have that anticipation of refinancing in just a couple of years. Lowering that payment then when the rates do come down. The other thing too that honestly I have just recently experienced in the last few months, is that there were a lot of clients who had pressed the pause button during the pandemic. They couldn't find a builder that had time, they were going to wait and have prices come down. Well, now they're calling and not only is the price higher, the rates are higher. So, it's a little bit of a shock. I actually had somebody say, ‘man, I wish I would have listened to you a couple of years ago.’

KIM: We still have people come to us today with the same attitude, ‘maybe I’ll wait this out.’ You cannot wait this out. Construction prices, we've talked about it, it’s the inflation around our industry and it's not going to subside. Now, some economists think that the inflation surrounding the residential industry is over. But I'm not sure I agree with that. What do you think?

TRISHA: I don't necessarily agree, and I think there are a couple of different ways to look at that in terms of your existing inventory versus materials and supplies in the cost of goods. I think those are kind of a little bit different, they are related, but the market is still going strong. There are still certainly houses that you see selling above list, some of that has to do with where the Realtor sets the price, just to drive the demand for people to come see the house. So just because an existing home sells above list, doesn't necessarily tell you you're still in an appreciating or escalating market. You kind of have to look at the market as a whole.

KIM: If you look at the market as a whole, one thing that continues to drive the residential construction industry is the lack of housing inventory. And I'm not necessarily just talking about new construction, I'm talking about existing homes, or some people call them used homes. But, if you think about it, across the country there are not enough used homes on the market right now. That's one of the things fueling the the construction industry And another thing is the simple, the formation of households, you know, there's more and more population growth and people are are reaching the age where they're thinking about buying a new home while there's not enough inventory of existing homes, so they look for new homes. You can go back, you know this Trisha, we've talked about it before. You can go back to 2007, 2008, 2009 - when we had the crash of the housing industry - and so many builders and so many of the trades got out of the industry. We've never recovered from that. So, we as builders cannot build enough homes each year to satisfy this demand. That's why if people think they can wait it out and wait for prices to come down, that's not going to happen because there's too much pent-up demand.

There are just too many reasons, too many headwinds, as far as the construction industry, and you're just not going to see prices come down, right?

TRISHA: I absolutely agree and it is definitely a pent-up demand. I think the inventory that is coming to the market isn't necessarily always the inventory that people are looking for. So, on top of it, the inventory is short, but it's a lot of times not what a client is looking for. So, again, they end up in a position where they want to build.

I've seen a very big increase in the combination of households in terms of mutli-generational living. And I know we've talked about it on a podcast before, but that just keeps increasing, it keeps growing.

KIM: We're dealing with it in both the markets in which we build.

TRISHA: It's from two phases: your kids are staying at home a little longer and then you're bringing in that generation of the parents’ parents - the grandparents are coming in to live.

KIM: Before we move on to some other topics, we've talked about some of the challenges and some of the uncertainty. How do you talk to potential clients about the interest rate and the market uncertainty to calm them down and give them some confidence to invest in a new home?

TRISHA: Even in reading articles that are out there; number one, this is not 2007-2008 [00:10:29] and the price is not going to go down, and talking about what makes financial sense. And maybe you do have a little bit of compromise. Sometimes it's talking about maybe you don't get everything that you wanted in the home right away today. But, again, it's still better to build that home and move forward and maybe you make some minor adjustments later on when interest rates go down, cash flow might be a little bit better, you get a big bonus, any of those things.

KIM: Trisha, you bring up an interesting point because I'm still trying to counsel a lot of our clients on the fact that prices are going to continue to increase. You can't build a home that's maybe as big, or you might have to make some decisions when it comes to the finish levels. But this is still a good time to build a home. And so I think that that's the one thing that we try to do with the podcast, when we're meeting with clients, when people call in or write in and want information, is help them understand and help educate them about the lending component.

TRISHA: Yeah. Absolutely. And it changes affordability for sure, but I talk to clients a lot about not just today but you know what does tomorrow look like? What does two years from now look like? So that you can make sure that they are planning for that, and that what they build encompasses that goal, but still making it affordable for where today's rates are at.

KIM: It's interesting because I know you've heard the term value engineering, it's one that we are using today more than we've ever used it before. Value engineering is, basically you have a set of plans and you design the house that you want. You price the house that you want. It's probably going to come back higher than you want. So that's when the value engineering comes into play. And I can tell you, we've had several clients come to us in both markets saying this is a house that we've designed, but the builder priced it out and it came back much higher than we wanted. So we've gotten very good about understanding the cost per square foot component, based upon the complexity of design and based upon the finishes of a particular house. We've gotten really good, and what I would advise our listeners to do is don't be disappointed if the price of that house comes back higher than you think initially. Make sure you work with your builder to value engineer and simplify the design and change your selections to fit within your budget.

I'm sure you've seen it because you deal with us and our clients, and you say, ‘okay, are we ready to turn in the budget?’ And what do I tell you? ‘no, we have to value engineer it.’

TRISHA: I advise clients the same because they're always concerned, you know, they're concerned about where that price is going to come in at, and what does that mean? Especially when they apply for a loan. They're always hesitant, feeling like, does this mean that I have to take this loan? Does this mean I have to do this? And a conversation I have every time is: please know that this is a moving target. We're starting this with an idea we're starting this with the jump-off point of what your target budget, your target spend is, but we know we're going to have to adjust it throughout the process. Even as it relates to an appraisal and what people pick.

That's another thing I tell clients, just like you said, it's a give and take. Maybe you have to make some different selections, or maybe you were going to have built-ins in your living room and now you need to eliminate those. It's okay. Those are not value changing items. So, you know, value engineering. You just have to move on down the road and embrace what you have today. And then maybe plan for some of those extras later on.

KIM: I think people need to understand the role of a lender when it comes to new construction versus an existing home because it's totally different. I really highly recommend that any of our listeners considering building really needs to find a lender who specializes in new construction. So, tell us why.

TRISHA: New construction is just very different. The types of loans that are offered are very different. This is the first time that you're really putting together the land and the home. And so having a lender that understands that process, and not just the process of the budget, but the process of the build and what needs to happen and what are the important parts of the build. Making sure that your lender has a good disbursement process because that ensures that the build continues to go and that you don't have a stop in work because people haven't been paid.  It's a lender understanding that a lot of times these clients have an existing home that they wish to stay in until construction is complete. So having a lender that has a little bit of flexibility in how that loan works and flows so that you, the client, don't end up financing three or four times just to get where you want once the home is complete.

KIM: There are checks and balances in place too for lenders to give their clients and the builders clients peace of mind during the process. For example, whether it's a dispersing agent, a title company, or the lender themselves, they will actually go out and do an inspection of the construction to see what the progress is to make sure that what the builder is asking to be paid for has been completed.

I know that we, in our St. Louis market, deal with a title company, and the title company is actually the one, kind of the middleman, who will do all the dispersing for us so we don't have to, so it's a good checks and balances. In our Northern Utah office there's the checks and balances that the work has been done, but we, Hibbs, are the one that's paying all the vendors and collecting lien waivers. So there's a couple of different ways to go about it.

But the bottom line is, lenders are checking builders and builders have to be approved. And there's the inspection process. So there are checks and balances built in to make sure that it's a safe process for the client.

TRISHA: That's another reason why it's really important to find a lender who does specialize in construction because, as opposed to the existing home, you're done when you sign the loan, the loan officers are done and you're done. Everything's complete.

But with construction, when you close on the loan everything's just getting started. There are months of interaction and intricacies that happen as you're going through the process. And just making sure that you have a lender that's the partner that you can call when you have questions and that you're not chasing this 1-800 number and you feel lost is extremely important.

KIM: Let's talk a little bit about the role of contingencies in a loan. Because we do fixed price contracts so our clients know what the price of the build is going to, but then they have allowances for their finishes and for their selections. But I still recommend that a client have a contingency in the budget for things that might come up, some of the unknowns. Whether it's rock when excavating or what we call in the midwest plastic or clay soil, both of those have to be mitigated in different ways. You know, the perfect example was a couple of years ago when the lumber prices were just going up,skyrocketing unexpectedly. And so in our contract, we have a clause, which is that this is the client's home and they need to be responsible for things that are happening unexpectedly.

But some clients are hesitant to put that contingency in the contract or the budget thinking, ‘well the builder is just going to go spend it.’ And that's not the case.

TRISHA: I hear that almost every time, and that truly is not the case. Some lenders will require that a client have the contingency. Associated Bank does not. However, we highly encourage that with our clients. It is a part of my first conversation with them when we talk about budget because there are just unknowns that happen. Construction happens over a phase of time, so the economy might not even be the same as when you start as when you finish. Again, it's just an unknown. You don't know what you don't know, that's what I tell people all the time.

And the other thing is too you spend months planning this home, you went through the plans, you have 100% put yourself into it. But you're in the middle of building and then all the sudden you're doing like this electrical walkthrough and you're like, ‘oh shoot, I didn't think that I wanted this little hub in my mudroom that everybody could come in and hit the iPad or whatever. So I always tell clients, it's good to have a contingency because you might want to add something that you hadn't considered originally. Therefore having the contingency takes the burden off of you in terms of needing to have that cash.

A lender is going to hold back for construction the amount of the construction contract, the amount we are told to hold back. So if you don't have a contingency, I don't have extra funds to advance for those unknowns.

KIM: One of the benefits of having a contingency has to do with your allowances. Your allowances are for all your selections. And if you see this really killer countertop or these really cool light fixtures that you must have and let's say you add $5,000 to your flooring allowance and $5,000 to your lighting allowance. If you don't have a contingency, you as a lender are going to require that the client bring that money to the title company or to the lender whenever that disbursement needs to be made. So they're going to have to come out of pocket if you don't have that contingency.

TRISHA: That is correct. A lender may handle it at different times, but for us, once we know that price has increased, whether it's necessarily time to pay that particular overage or not, we require the client to bring those funds in. Part of the dispersing agreement that they sign at closing - they sign it, the builder signs it, and the dispersing agent signs it - states that we require to have all funds needed to complete the home at all times.

So another lender may require it when they're paying the invoice, but at either point the client has to bring those extra funds in. So if you've put everything into your down payment and you don't have that cash, the lender also doesn't have a place to draw that from.

KIM: So the takeaway is, do not be afraid of a contingency. They are truly there unknowns that come up. They are truly there for changes to your selection process and they will really benefit you instead of having to come to the table later with money that you might not have available. So, embrace the contingencies, as I like to say

TRISHA: And another thing is with most construction loans, during the construction phase of the loan you’re making an interest-only payment only on the funds that have been drawn. The contingency really is just that, it's not costing you anything to be there unless you utilize it. So I also think that's a really important point for people to hear.

KIM: That’s such a great point. While we're on kind of the terms, of some of the loans and all. So are we still seeing the one-time close up front, closing on the back end, holding interest rates? Tell us a little bit about what's kind of common and popular around the country right now as far as mortgage loans and for new construction.

TRISHA: So actually the one time close has made a really big push in the last few years. It used to be that only a few lenders had a loan like that. Now you see it where most lenders have gotten on board with some form of a one-time close construction loan.

Ultimately, that means that you're closing the loan before construction starts. It is a permanent mortgage that has a construction feature at the beginning of the loan to handle the building of the home and the interest-only payments.

For us, we’re a portfolio lender and we're going to retain that loan. When the home is complete and you're going to transition out of the construction phase and into your regular principal interest mortgage phase, we have an additional opportunity to make another down payment. And that's very helpful because there isn't a need to refinance. You don't need to finance again. There is not a second closing, which is also very nice, no additional closing costs at that point. So clients should be expecting to pay those closing costs at the time, they're closing the loan before construction starts.

KIM: What about interest rates? If interest rates go up, if interest rates go down, what happens if you're closing and your construction takes a year before it converts to your permanent? What happens with that fluctuation?

TRISHA: Most lenders offer a couple of options. For example, at Associated Bank we offer a 30-year fixed option as well as some adjustable rate, or “ARM” options. In our arm options, they are fixed for a period of time - 5, 7, or 10 years is what we offer. That gives the client plenty of time to get through the build, they're not being exposed to the market should interest rates rise during that time. So they are protected that way. As soon as construction is complete, for us, you could do anything with that mortgage at that point in time. If you have taken out an adjustable rate and rates are lower, you have an option to convert to a 30-year fixed at any point after construction is complete. You can very easily take advantage of those lower rates by doing that conversion option. It varies lender by lender, but a lot are structured that way.

KIM: Yeah, I found that too, because we deal with several different lenders in the Utah area, primarily dealing with you here. You called yourself a portfolio lender. So that's where you're keeping all of the loans within the bank and servicing them and all. So what is the other type of lenders? And what's the big difference are the pros and cons?

TRISHA: The other type of lender would be a lender who is not retaining that servicing, right? They're going to sell that loan. It is disclosed to you, you know that could happen. Some lenders will sell everything, like if you're more of a mortgage broker, per se. So when they go to sell that means maybe you closed a loan with US Bank but maybe PNC buys it, right? So your lender could change.

When they do that, you have to meet a certain standard in the loans because you're bundling those as a lender and you're selling those out in the public. And so, the public has an expectation, and when I mean public other lenders, right? So they have an expectation of what those loans and that bundle are going to be like. So they don't have the flexibility that a portfolio lender has.

We're going to hold that loan so I don't have to worry about what the expectation is of the guy buying it. That allows for quite a bit more flexibility. It could be flexibility in the down payment requirement; it could be flexibility in how we offer a conversion. The conversion is basically the alternative to a refinance. You're not going through the full process of a refinance, you don't pay those costs, you're not providing all that documentation, and it's really just about having made your payment on time and lowering that payment. Whenever I talk to clients about it, especially in the market we're in right now, it is like music to their ears that it makes it so simple.

KIM: The other thing that kind of varies from project to project, different parts of the country, lender to lender, whether it's a first home or whether it's a vacation home. Down payment requirements can be 10% they can be 20%. You might have it where if you own the lot, that can be considered part of the equity into the project, where maybe another lender looks at things a little bit differently.

So we can’t give a hard fast rule as far as what down payments are. I can just say that based upon where we're building, based upon what we're seeing, it really is ranging anywhere from 10 to 20 percent. I'm assuming that’s about what you would understand it would be too?

TRISHA: Yes, that is correct. And that is really largely based on The client's credit score and the cost to build.

KIM: Yeah and a lot of it too has to do with okay, is it your primary residence or is it secondary? So there's other things  and there's so many you know different levels out there I don't think we could hit them all if we talked about them. So I'm going to move on to another subject, which is appraisals. That's what you had mentioned a few minutes ago. But I think it's important to talk about it because the appraisal, or the appraiser, can make or break a construction project.

I know a few years ago we seemed to be having a lot of trouble because the appraisers couldn't factor in, or maybe they couldn't comprehend, these massive price increases that builders were sustaining and budgets then were a lot higher than a lot of the appraisers had seen. We ran into appraisal issues. I know Associated Bank was great with us and they would sometimes issue a second appraisal just to see if we could bring that project in where it needed to be. Where are we right now with the appraisal industry? Do you think things have improved?

TRISHA: I would say that is a very good question that the client should also ask their lender: how do they select their appraiser? Because in general, a lender cannot steer that appraisal, right? They could years ago, but not anymore. That changed several years ago, and so you have to go through what they call an AMC, and then it's just randomly assigned to an appraiser in your area.

Again for existing inventory that can work fine. New construction is so different that it's very important that your lender is working with appraisers who understand construction, understand the process, understand reading a bid and seeing a set of plans and knowing what that means. So that they can properly appraise that future home that you're building based on what the current market is doing.

Associated has what we call a specialty panel of appraisers that we utilize specifically for our construction and renovation projects. Now they're still assigned in a round-robin style, I'm not directing it, but we've just narrowed it down to appraisers that have that expertise.

Above and beyond that, the appraisal is really dictated by your current market. That’s what was really hard a few years ago, because prices to build rose drastically. While the pricing and the sale of existing homes were coming up, the materials to build new were going up so much faster.

When an appraiser is looking for the comparables that they're going to put into their report, they're pulling the comparables of homes that have recently sold. Trying to find a new construction home that has recently sold is very valuable in a situation like that because that's going to show you that the market is bearing that increased cost, that the house is selling for what it costs to build.

KIM: But here's part of the dilemma when it comes to custom homes and the appraisers. If you're building a custom home, many times this information is not in the MLS system. So the appraisers don't know what the price is or what the finishes are for a new custom home that's been built because it just never hits the MLS and that's part of how they do their comparison.

That's why I think this is a conversation that our listeners should really ask their lender, ‘tell me about how the appraisal process works. Do you have a pool? What is the qualification? And then I think the question you need to ask is, ‘what happens if the appraisal comes back too low? Are you going to order a new one? Who's going to pay for it?’ Those I think are all very legit questions that need to be asked of a lender.

TRISHA: It's extremely important to find out what their process is. At Associated Bank, we do that appraisal up front. We're doing it before the loan closes so that everybody involved knows, what does that return on investment look like? It sets the loan to value so we know what the loan to value that the client is going to have and the client knows. That's really important for us. For us, we only use that appraisal. Another good question to ask your lender, ‘do you reappraise it at the end of the build?’ Because there's risk associated with that because for if they're going to re-evaluate it later on, your loan to value could change which means your loan terms could change.

KIM: It could change up or down though. I could change up or down as it can go either direction.

TRISHA: Now in our situation, if a build is done and the market has continued to appreciate, then we do have a path which the client can request a new appraisal and we can have an evaluation done then to relook at that loan to value compared to where we closed.

The nice thing is that, with our method, it can't negatively impact the client.

KIM: There's not a one-size-fits-all for lenders across the country. And that's why I think it's important for those thinking about building to interview several. Find someone that you feel like you get along great with, that provides you the information you think is what you're looking for.  Just like you're interviewing builders, interview lenders as well and find that good fit.

Trisha, I thoroughly enjoyed this conversation because you always bring such great information. So, the final question I have is where's the industry going? Any changes down the road that you can see, or is it kind of status quo for the next few years?

TRISHA: As a whole, we're going to see the appreciation or inflation slow. We're going to come a little flat, I think. But I don't think that's going to mean that it's going to necessarily slow. If anything, I feel like it's going to help things increase. I think we're going to see more traffic. I think you'll see more existing homes come on the market. And then as interest rates come down a little bit, again, that new construction component is just going to continue to grow.

KIM: So I did lie. I have one other question I have to ask, because we're a high-performance builder. What is going on in that industry? I know that there are appraisers who specialize in it and I know there are lenders who specialize in it. If you're building a high performance home, I think you should find a lender and an appraiser who understand it. Talk about that part of the industry just a little bit.

TRISHA: There is an extra form that goes in the appraisal that speaks to the high performance of the home. A lender might offer some different things. For example, we would allow you. You go to a higher debt-to-income than what the typical threshold would be. So your debt-to-income is held at a certain percentage of your gross income, and that is because we know you have other expenses other than what is seen on a credit report. So that would allow that client to go higher in that debt-to-income knowing that they aren't going to have those more expensive utility bills that a lot of clients will incur.

And then the other thing is too, a lot of it is related to what availability and data is out there in that area for green homes in terms of being able to have other homes there for those comparables. And again, seeing that value come out when they're doing the valuation.

KIM: Excellent. So just like when you're selecting your architect upfront, selecting your builder up front, I highly recommend, and assume you agree, pick your lender up front. Put this whole package together, the whole partnership of everybody that can work toward your goal of, what is the budget? Knowing the budget, then can help set the design. The lender can be working on the financing behind the scenes, you can be working on the design. You can be working on the selections. By putting that whole package together up front, I think it makes for a much more enjoyable, stress-free process when building your custom home.

TRISHA: I really think that clients should interview their lender the same way they would interview their builder and ask some of the same questions, you know. What is your experience? Who have you worked with? How long have you been doing this? How long has your bank been doing this? Because just like you want a builder that's experienced and knowledgeable, you want the same thing in your lender.

KIM: Totally agree. So, four appearances, on the art of custom, you feeling more comfortable because you certainly did a great job?

TRISHA: Yes, I'm ready for number five,

KIM: Trisha, seriously, thank you very much. You always bring just a wealth of information very well explained, and hopefully, this has really given our listeners the confidence to understand the lending component of new construction. So thank you very much.

TRISHA: Yes, thank you for having me. [00:36:29]

KIM: Trisha is always an excellent guest and has a lot of really good information that really our listeners from coast to coast can use. It's just a very important topic and I'm really glad that we broached it this season.

MELODY: She has some great information too that she's put together that we share with a lot of our clients or potential clients. She has a road map to the whole process showing all of that. So I'm going to put that in our show notes as a resource as well because it actually clarified things for me quite a bit too.

KIM: I think you know there if there's a take away it's that construction prices are not going to ease off. So if you're thinking about building, you can't wait them out.

Interest rates, even though there was a recent hike, that's already been kind of factored into the equation if you will for the mortgage rates, we might experience another one before the end of the year. But Trisha seems to think that this still is a very good time to explore building.

The other takeaway is, keep in mind, even if you lock in at a rate right now with At that rate comes back down. You can certainly refinance or if rates back off before the home is finished. You know, you can take advantage of that as well. So just keep all that in mind when you're thinking about is this the time to build that house

MELODY: And I think the other great piece of information that she shared with how to choose a lender was that there were some times where you could be reappraised. If you're worried about interest rates, finding somebody that will not come out and reappraise and put that loan in danger seems like an even bigger point right now then.

So you just want to thank everybody for tuning in.

Speaker 1: Yeah it's been very educational in many ways. I'm learning all about the Barbie Movie as we go along, as well. But no offense, Melody, I think Trisha's information was a little bit more timely and helpful for everybody

MELODY: I mean potentially but [00:38:22] I don't have the energy, or the Kenergy, to argue that.

KIM: I tell you what instead of more puns, tell us more about any resources and and or phone numbers and all that fun stuff

MELODY: Yes. We will have a Guide to Construction Lending up on the show notes. And if you have the time, please rate, review, and subscribe to us on Apple Podcasts. That helps us get found by other people who are interested in building their dream home.

And we also encourage you to reach out to us with any questions. You can call us at 314-266-9709 [00:38:54] and leave a message. That's not an answered number, but we'll get back to you if you leave us some contact information.

KIM: And we do like to hear from our listeners and interact with them. So we do encourage that and thanks everyone as Melody said for listening and we look forward to you joining us for our next episode of The Art of Custom

OUTRO: [00:39:19] For more information, visit www.artofcustompodcast.com. Or find us on Facebook and Linkedin as The Art of Custom. Be sure to subscribe to get the latest episodes and please rate and review. The Art of Custom is produced by Hug Monster Sound with original music by Adam Frick-Verdine. Thanks for listening.