March 10, 2014
This week we had Pat Flynn from Eternity Homes and Justin Jurkovich from WJ Bradley join us in studio. The first topic we discussed was trends in new construction. Energy efficiency has become one of the top trends that people are focusing on when building new. Pat Flynn discussed the most obvious reason for the energy efficiency trend, which is the amount of money that you can save. If a home is insulated and sealed properly, those monthly energy bills will dramatically decrease. Eternity Homes actually tests their new construction homes three different times throughout the building process. They test them at framing, after they are insulated, and then once more after the home is completely done to make sure that all the plates are tied together, OSB’s, Buildrites, and Styrofoam’s are installed properly. Testing these items will guarantee that air isn’t sneaking under the plates or that snow isn’t creeping in and then forming ice dams.
In the new construction business there are different eligible levels of energy efficiency that can be built into the home. The first is the energy-tested level where your home will meet or exceed the current energy codes and building officials. This level is given a rating of 100, which means the home will pass. The next level is the certified level meaning you are in the 60 percentile and you are quite a bit better than just the norm. The next is the advanced certified, ranging below the 60 percentile. Then there is also the master rating which is anything below the 50 percentile. Once you get to this level, you are looking at more than just the structure. It will include how the utilities are installed, how they are sealed, how the heating system works once installed, etc. Pat Flynn describes the levels like a golf game, the lower the score, the better.
Of course, when you want to build a new home, you have to think of how you are going to finance it. Justin Jurkovich discussed the differences between a one-time closing and a traditional “two-time” closing. One-time close involves you going in, going to a title company and then physically closing on a mortgage upfront and your dollar amount is set before the house is even built. We’ll say the amount is $300,000. Once you’ve signed your mortgage and your note, all that happens during the process is the home gets built and the builder will get paid out. Once the home is complete, occupancy is issued and you will go in for a modification, which will modify it from a loan you will be able to draw money out on. You will pay the final advance out and it’s now an end loan.
Two-time closes come in handy when there is potential for change in the home. Say you want to add granite countertops or a restroom in the basement, this hasn’t been factored into the budget on the front end and you’ve already signed for your $300,000. How is that going to get paid with your one-time close? With the one-time close, something like this would have to be paid out of pocket or it’s just not going to happen. There are definitely cost savings in a one-time close, but a two-time close really isn’t going to cost you that much more when you look at it in the grand scheme of things if you have the potential for changes or adds during your project. It might save you $3,000 over the course of the loan to do the one-time close, but if you decide to add that restroom in the basement, it’s $10,000 out of pocket. If you choose to go with the two-time close you will be paying about $15 a month extra, equivalent to about $3,000 more on the total loan which sounds a lot better than having to pay the $10,000 out of pocket for your new restroom with the one-time close.
Michelle: I have a 3 bedroom rambler in Cottage Grove I’m wanting to sell. Do you foresee the turn around with improvement on the home values changing anytime soon?
Chris: Everything metro wide is turning to the positive.
Andy: If you can keep up with the new construction that is coming in and prove that your home is updated like homes that are being built around you, then your home value will go up with the values of the new construction.
Text Question: Why can’t we find good mortgage rates for quality manufactured homes?
Justin Jurkovich: The biggest hurdle you will find on manufactured homes is that there are not a lot of lenders that will actually lend on then, so the amount of outlets you have is limited. WJB does lend on manufactured homes. Your rate really shouldn’t be drastically different than any other home if you find a lender that actually does the product.
Text Question: Which is more efficient, forced air or radiant air heating?
Pat Flynn: Forced air is the more efficient heating source and cooling. The radiant air over time has suggested that after 10 years or so you would recap some of those costs but as of now forced air is the most economical.