Tag: New Home Build

Categories
Buy a Home Home Purchase

2020 New Home Sales Rising Faster Than Supply

Woman with dark hair and white shirt, man with dark hair and blue shirt, both looking at blueprints, in front of new construction, as they pursue a plan toward 2020 New Home Sales

2020 new home sales are rising faster than home builders can replenish their supply. Sales of new homes rose to its highest level in over 14 years during the month of August. As a result, there is a very low 3.3 months’ worth of inventory. Generally, the new home sales market is considered “balanced” when there is a six month supply of new homes for sale.

Home buyers can expect to see rising home prices. However, the greatest demand is at price points below $300,000 for first-time home buyers. In hot markets such as Orlando, Florida, new residential construction rose by 22% from August 2019 to August 2020. Across the United States, much of the rising cost is attributable to a severe housing shortage. Builders have not kept pace with demand for several reasons. Many still have fears ever since the 2008 market crash. Also, they may have difficulty in building due to zoning issues or neighbor concerns about parking and density.

Home Builders Facing High Lumber Prices, Other Constraints

  1. Lumber futures reached a record high of $1,000 per 1,000 board feet in September. The commodity has been the top-performing major raw material during 2020, due to high demand from home builders and home owners undertaking do-it-yourself (DIY) home remodeling projects.
  2. Buildable lots have been in low supply, hampering 2020 new home sales. As early as January, 40% of single-family builders reported the supply of lots was low, and 18% reported the supply as very low. Because of the low supply, lot prices have been increasing, and lot sizes have been decreasing.
  3. Construction workers continue to be in short supply. The Home Builders Institute recognizes a shortage of workers. This shortage is due to increasing demand for housing and a low supply of existing homes for sale. Skilled workers are retiring from the home building industry. However, not enough new workers coming into the field to replace those who are retiring.

New Construction Loans for 2020 New Home Sales

Transferees looking for a new construction loan should be aware of how it differs from a traditional mortgage loan. Tim Hofmann, Vice President, Construction Lending Administration Manager at TIAA Bank previously shared that a new construction loan has the following features:

  1. Can be thought of as a specific dollar amount “line of credit”
  2. The length of a new construction loan coincides with the time to build the home, usually around 12 months.
  3. Home builders/borrowers obtain funds by submitting requests for draws to the lender.
  4. New construction loans are not sold off to investors; they remain within the lender’s portfolio.
  5. Each draw request is accompanied by an interest payment at that specific time on what is drawn.
  6. Following completion of the home build, the lender grants a mortgage for the new home.
  7. The new mortgage issued by the lender results in paying off the construction loan balance.

What Does This Mean for 2020 New Home Sales?

Transferees seeking a new construction loan to build a home should first review their current financial arrangements with a qualified lender. Depending on their financial circumstances, transferees with mortgages on their current home may still be able to qualify for a new construction loan. Lending requirements will determine if they can qualify for a new construction loan while still holding their current mortgage debt.

What Should Employers do?

Employers that have transferees who are seeking a new construction loan for their relocation should direct them to speak with qualified lenders and financial advisors for guidance on 2020 new home sales. They should also direct them to speak with an experienced and qualified Realtor® who can assist them in determining where they want to live in the new location.

Employers should also review and benchmark their relocation policy with a Relocation Management Company (RMC). RMCs that have knowledge and experience with relocations involving new home sales are ideal sources for policy updates and best practice information. They will also understand the reasons why employers should always encourage transferees to buy instead of rent.

There may be some necessary relocation policy enhancements to allow for exceptions that arise from transferees who want to obtain a new construction loan. The 2020 real estate market balance between supply and demand is not equal. As a result, pricing, availability, and speed of real estate transactions may impact the ability of transferees to obtain financing. These same issues may also hinder transferees’ ability to arrange new home sales in their most preferred locations.

Conclusion

GMS’ team of domestic relocation experts has helped thousands of our clients understand how to provide solutions for transferees looking to purchase a new home. During the challenging 2020 new home sales market, it is important for employers to provide new hires and transferees with guidance and resources. This will help employers ensure a smooth and successful relocation process.

GMS was the first relocation company to register as a “.com.” The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.

New SafeRelo™ COVID-19 Knowledge Portal

GMS recently launched its new SafeRelo™ COVID-19 Knowledge Portal featuring a number of helpful resources including:

  • Curated selection of news and articles specific to managing relocation programs and issues relating to COVID-19
  • Comprehensive guide to national, international, and local online sources for current data
  • Program/Policy Evaluation (PPE) Tool for instant relocation policy reviews

Contact our experts online to learn how to help transferees maneuver through the 2020 new home sales market, or give us a call at 800.617.1904 or 480.922.0700 today.

GMS is sharing public knowledge and can help companies more clearly understand new construction loans for relocations. However, GMS is not a CPA firm or a lender, and is not giving financial advice. Everyone’s financial situation is different; individuals and employers should consult their lenders and financial advisors prior to making any decisions.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Buy a Home Domestic Relocation Domestic Relocation Tips Domestic Relocation Trends Home Purchase Job Market Job Seekers Labor Force Talent Mobility United States Economy

Choose Topeka Incentives Aim to Draw New Residents to Kansas

The Kansas state capitol building is located in downtown Topeka on land donated by the Atchison, Topeka and Santa Fe Railroad company. Construction began in 1866 and was officially completed 37 years later in 1903 at a total cost of just over 3.2 million dollars. The building is over 300 feet tall and is 17 feet taller than the U.S. Capitol building in Washington D.C.

Choose Topeka is a new incentive program that will draw new residents to Topeka and Shawnee County, Kansas. The program begins in 2020 with a public launch and full promotion. The incentives are performance based. As a result, new residents will become eligible after residing in the community for one year.

The program arose from a partnership between GO Topeka and local Topeka businesses. Over the past year, organizers have been working to develop the program and marketing materials to reach a wide audience. GO Topeka focuses on creating economic opportunities and growing the local business climate. The Joint Economic Development Organization has an agreement for services with GO Topeka. Both organizations are working together on the Choose Topeka incentive program.

What are the Eligibility Requirements for Choose Topeka?

The Choose Topeka incentive program is to help draw employees to work at local businesses. Therefore, the eligibility requirements center on meeting the needs of local employers and full-time positions:

  1. Participants must be eligible to work in the US
  2. Program requires participants to move to Topeka for a full-time position
  3. Employers must participate in the program for participants to receive matching funds
  4. Participants must purchase or rent a home in Shawnee County within a year of their hire and move to the area

What are the Benefits for Participants in Choose Topeka?

The benefits for participants in Choose Topeka are generous, and apply to both the participant as well as to the employer.

Participant Benefits

Up to $15,000 in funds in Year 1

  • Renting: $10,000
  • Home Purchase: $15,000

Source of funds: GO Topeka/Joint Economic Development Organization (JEDO) and Employer, match at 50%

Employer Benefits

  • Employer fully funds $10,000 up to $15,000 with employee transfer
  • After Year 1, GO Topeka/JEDO reimburse up to $5,000 ($10K) or $7,500 ($15K) to employer for employee retention

The Choose Topeka incentives are based on performance. Employees must move to the community and reside for at least one full year before becoming eligible. Only primary residences are eligible for the incentives. The incentives may be used for all expenses related to moving.

What is the Goal of Choose Topeka?

The goal of Choose Topeka is to draw up to 60 new residents and their families to the city. Employers will gain new workers with requisite skills. Also, several industries will receive economic benefits as the new residents move in and purchase locally.

GO Topeka estimates the total local economic impact of the Choose Topeka incentives to be:

  • Over $2.14 million/Year 1
  • Up to $11.38 million/By Year 5

What Should Employers do About Choose Topeka?

Companies in Topeka and the surrounding Shawnee County area that have growth initiatives may be able to leverage the Choose Topeka incentives in their talent acquisition and relocation programs. Companies should examine their plans for corporate expansion. They should also consider participating in the Choose Topeka incentive program to gain the matching funds provided by GO Topeka/JEDO.

Many other US locations offer similar moving incentives. As a result, companies should leverage GO Topeka’s 2020 marketing and promotional efforts for the Choose Topeka incentive program into their employee recruitment efforts.

Conclusion

GMS’ team of domestic relocation experts has helped thousands of our clients understand how to leverage moving incentives such as those in the new Choose Topeka program to attract and retain talent. Our team can help your company by using industry best practices to design your relocation program. This will increase your company’s ability to hire and retain new employees.

GMS was the first relocation company to register as a .com, created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Contact our experts online to discuss your company’s interest in learning how it can leverage the Choose Topeka moving incentives to attract and retain talent, or give us a call at 800.617.1904 or 480.922.0700 today.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Buy a Home Global Relocation Global Relocation Challenges Home Purchase Relocation Challenges

Mortgage Loan for Foreign Nationals Relocating to the United States

Happy family is standing with keys from their new house in hand. Smiling and looking at camera.

Many of Global Mobility Solutions’ clients have transferees relocating to the United States from outside the country. Often, they will need a mortgage loan to buy a home. These transferees may not have established credit in the US. As a result, they will not have a credit profile that lenders can use to determine their creditworthiness.

GMS spoke with Michael Farner, an expert at Quicken Loans who agreed to share his advice and guidance on this topic.

How Can a Foreign National Obtain a Mortgage to Buy a Home in the US?

According to Michael Farner, if a foreign national has established credit in the US over a period of time long enough to have all three credit bureaus reporting, Quicken Loans would also be able to lend at that time.

Quicken Loans and other mortgage companies have a program to support foreign nationals who are relocating to the US and want to obtain a mortgage, but who have not established credit in the US. The program entails work on the part of Quicken Loans to create a credit profile for the foreign national.

Important Points to Note for Program Eligibility Include:

  1. There must be 0 credit established in the US to qualify for this program. In other words, the foreign national must not have obtained any other credit instrument. Examples may include a loan to buy a car or a credit card in the US.
  2. The foreign national must provide a social security number.

If the foreign national is eligible for the Quicken Loans program, the lender will then build a credit profile for the customer. To do this, the lender may examine the foreign national’s debt in their departure country. This examination will include:

  1. Information on payments for housing, including rent payments, showing 24 months of history for each credit reference.
  2. Information for three other “non-housing” debts that can establish payment histories. Examples may include insurance, utilities, or automobile loans. These debts must also show 24 months of history for each credit reference.

The foreign national may need to assist the lender in obtaining information. The lender may ask the foreign national to participate in a conference call with their departure country’s financial institution.

Once Quicken Loans gathers sufficient information, they will build a credit profile for the foreign national. The credit profile will determine how much they can borrow on a mortgage loan, and the terms of the mortgage.

What are the Features of a Mortgage for a Foreign National?

A mortgage for a transferee who will be relocating to the US is similar to a mortgage for any US-based customer who is seeking to buy a home.

For a foreign national, a mortgage will generally feature the following:

  1. Finances the purchase of an existing home.
  2. Length may be 15 or 30 years.
  3. Interest rate may be fixed or variable.
  4. Foreign national borrower makes principle and interest payments for the life of the mortgage.
  5. Mortgage is often sold to investors in the bond market.

Do Foreign National Transferees Need to Sell Their Current Home Before Applying for a New Mortgage?

Foreign national transferees who are relocating and who currently own a home in their departure country may want to keep their current home. Everyone’s situation is different, and what is possible depends on a number of factors:

  1. Is there a mortgage on the current home in the departure country?
  2. If yes, what is the amount of the current home mortgage?
  3. What are the amount and terms of the mortgage loan for the home in the US?
  4. Can the transferee obtain approval for the total debt load? This would include their current mortgage and the new mortgage loan in the US.

What does this mean?

Foreign national transferees who want to obtain a mortgage in the US to buy a home should review their current financial arrangements with a qualified lender. Transferees who have a mortgage on their current home in their departure country may be able to obtain mortgage for a home in the US. However, this depends on their financial circumstances. Importantly, transferees should understand that they must obtain approval for the total amount of current mortgage debt and the new mortgage loan in the US.

What should employers do?

Employers with foreign national transferees looking to buy a home in the US should direct them to speak with qualified lenders and financial advisors for guidance. Employers should also review their relocation policies to determine if enhancements can be made to allow for exceptions that may arise from foreign national transferees who want to obtain a mortgage in the US.

Conclusion

Global Mobility Solutions’ team of corporate relocation experts has helped thousands of our clients understand how to communicate to foreign national transferees any issues related to obtaining mortgages to purchase a home in the US. Therefore, our team can help your company understand how best to proceed by providing guidance to foreign national transferees on obtaining information from qualified lenders and financial advisors.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

GMS is sharing public knowledge and can help companies more clearly understand mortgage loans for foreign national relocations. However, GMS is not a CPA firm or a lender, and is not giving financial advice. Everyone’s financial situation is different; individuals and employers should consult their lenders and financial advisors prior to making any decisions.

Request your complimentary relocation policy review

Categories
Buy a Home Domestic Relocation Domestic Relocation Tips Global Relocation Tips

New Construction Loan for Relocation

finical advisor showing couple their options
Meeting with financial adviser

What is a New Construction Loan for Relocation?

Many of Global Mobility Solutions’ clients have transferees who want to build a new home as part of their relocation and need a new construction loan. GMS spoke with two experts at TIAA Bank who agreed to share their advice and guidance on this topic:

Matt Canfield, Senior Vice President, Relocation and Affinity Lending

Tim Hofmann, Vice President, Construction Lending Administration Manager

New Construction Loan

A new construction loan for a transferee who will be relocating is not the same as a traditional home loan, or mortgage. These are two different lending vehicles that are used for very different purposes.

Mortgage versus New Construction Loan

A mortgage generally features the following:

  1. Finances the purchase of an existing home.
  2. Length may be 15, 20, or 30 years.
  3. Interest rate may be fixed or variable.
  4. Borrower makes principle and interest payments for the life of the mortgage.
  5. Lenders may sell mortgages to investors in the bond market.

A new construction loan generally features the following:

  1. Length is the time it takes to build a home (usually 12 months).
  2. Is similar to a line of credit for a specific amount.
  3. Borrowers/builders submit draw requests to lenders.
  4. Interest is paid only on what is drawn starting at the time of the draw.
  5. Loan remains in the lender’s portfolio and is not sold to investors.
  6. At completion, a mortgage is granted for the new home.
  7. New mortgage pays off the balance of the construction loan.

How Should a Transferee Start the Construction Loan Process?

According to Tim Hofmann at TIAA Bank, transferees should:

  1. Obtain preliminary approval from their lender.
  2. Submit an application for a construction loan.
  3. Transferees should determine if they want to lock their rate in.
    1. TIAA offers an extended rate lock option.
    2. This may be helpful if interest rates are expected to rise.
  4. Choose a contractor and a building plan

What does a Transferee Need to Obtain Approval for a New Construction Loan?

Tim shared the following three items required for approval:

  1. The contractor must be acceptable to the lender. They should have the requisite experience to build a home according to the plans.
  2. The lender will review the contractor and the budget. The budget must:
    1. Be reasonable for the proposed project.
    2. The home’s square footage/size is normal for the area.
    3. Construction costs are reasonable for the quality, size of the home, and the general area.
  3. Lenders approve credit files for the amount of the loan.
    1. If transferee will rent their former home, what is the rental?
    2. For the transferee who will carry both mortgages for the former and the new home, can they carry that debt?
    3. If transferee plans to sell the former home to help finance construction, what is the viability of having the sale occur in the necessary time?

Tim notes that there are a lot of factors to consider for new home construction. Important areas that may impact the process and the timing include:

  1. Will the new home require tearing down an older structure?
  2. Is the building lot included in the cost of the new home?
  3. Will the construction be an extensive renovation of an older structure such as a center-city townhouse?
  4. Are there specific architectural guidelines the project must follow?

Do Transferees Need to Sell Their Current Home Before Applying for a New Construction Loan?

Transferees who are relocating and who currently own a home may want to build a new home. They may want to keep living in their current home until their new home is ready for occupation. Everyone’s situation is different, and what is possible depends on a number of factors:

  1. Is there a mortgage on the current home?
  2. If yes, what is the amount of the current home mortgage?
  3. Will the transferee also be buying the land, or do they already own the land?
  4. What are the amount and terms of the new construction loan?
  5. Can the transferee receive approval for the total debt load of their current mortgage and the new construction loan?

TIAA Bank offers a unique product for new construction loans: OTC. OTC is TIAA Bank’s “One-Time Close” new construction mortgage loan (available only in AZ, CA, CO, CT, DC, DE, FL, IA, IL, IN, MA, MD, MI, MO, MT, NC, NJ, NV, NY, OH,OR, PA, SC, UT, VA, and WA.; other restrictions and limitations may apply).

With OTC from TIAA Bank, the customer only goes through one closing process. During construction, the customer and builder request draws to fund the project. At completion of the home, TIAA Bank only requires a two-page conversion. The customer is able to quickly move into their new home without having to wait for a second closing process. If the customer requires an extension, the two-page extension only requires notarization. TIAA Bank’s OTC new construction mortgage loan speeds the process for customers, and keeps them from having to go through a second, time-consuming closing.

What does this mean?

Transferees who want to obtain a new construction loan to build a home should review their current financial arrangements with a qualified lender. Transferees who have a mortgage on their current home may be able to obtain a new construction loan. However, this depends on their financial circumstances. Importantly, transferees should understand that they must receive approval for the total amount of current mortgage debt and new construction loan amount.

What should employers do?

Employers with transferees looking to build a new home as part of their relocation should direct them to speak with qualified lenders and financial advisors for guidance. They should also direct them to speak with a qualified Realtor® who can assist the employee in determining where they want to live in the new location. Employers should also review their relocation policies to determine if enhancements can be made to allow for exceptions that may arise from transferees who want to obtain a new construction loan.

Conclusion

Global Mobility Solutions’ team of corporate relocation experts has helped thousands of our clients understand how to communicate issues related to obtaining a new construction loan and various alternatives that might be up for consideration. Our team can help your company understand how best to proceed by providing guidance to transferees on obtaining information from qualified lenders and financial advisors.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

GMS is sharing public knowledge and can help companies more clearly understand new construction loans for relocations. However, GMS is not a CPA firm or a lender, and is not giving financial advice. Everyone’s financial situation is different; individuals and employers should consult their lenders and financial advisors prior to making any decisions.

Request your complimentary relocation policy review

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

About

About Us

Careers

GMS Client Login

Privacy Policy

 

Contact

Contact Us

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904 

Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

Accessibility by WAH

Looking for something?