How can Tilson's EasyBuy Program save you thousands, compared to a construction loan? Other builders will require you to cover the costs of construction while they are building your home. To do this, you'll need to get a construction loan from a bank or other lender. This type of loan pays the builder in installments for work to be completed during construction. When your home is finished, the balance of the construction loan is rolled over into your mortgage.

Why is a construction loan so expensive? First, there are costs and fees associated with getting these loans, up to 3% of the loan amount. Second, a hard equity payment, usually 20% of the total value of the home and land, is required up front. Finally, interest accrues on the amount paid out during the life of the loan, however long it takes to build. Your interest rate is generally 1% to 2% higher than the current mortgage rate. And since the length of a build and the amount paid out will vary, banks can't calculate total interest costs ahead of time. What about loans that offer no payments during construction? Even if you don't have to make monthly payments during construction, your loan will still accrue interest and simply roll it into your mortgage at the end of construction. Then you pay interest on the interest.

Tilson's EasyBuy Program funds the entirety of construction with no additional cost to the customer. Customers have more money in their pockets, no monthly payments, and only a 10% equity requirement. Plus, you'll have more peace of mind knowing your builder is financially sound enough to fund construction on their own.

Here's an example, showing two buyers building the same home but using two different financing options. Both buyers are building a $400,000 home on land worth $75,000. The total value of the home and the land is $475,000. Both buyers have paid $50,000 on their land.

Let's start with the deposit. Buyer A uses Tilson's EasyBuy Program and only needs 10% equity in their total land and home appraisal. Since they've already paid $50,000 on their land, they only pay the $3,000 builder deposit which is credited back at closing. Buyer B uses a traditional construction loan and needs to put 20% equity down. Since they've already paid $50,000 on their land, they must bring $45,000 in cash to meet the equity requirement. This brings the total loan amount to $380,000. This buyer also pays the bank an additional loan fee of 3% or close to $11,000, making the total cash needed to start around $56,000 plus the builder's deposit.

What about interest? Now that construction has started, buyer B begins paying interest on their loan. Since it's impossible to know the exact amount they'll pay, we'll use the estimation method recommended by constructionloancenter.com. A 9% interest rate adds an additional $24,000 paid to the lender over the course of the build on top of the $11,000 for loan fees. This brings the total construction loan costs to over $35,000 plus the builder deposit before they even start paying on their actual loan amount. Buyer A has no payments during construction.

What does this mean at the end of the day? Well, over the life of the loan buyer B has paid $35,340 in interest and fees and tied up an additional $45,000 in cash deposit, equaling $80,340 in total cash out of pocket plus their builder's deposit. Buyer A paid Tilson's $3,000 deposit which is credited back at closing. The difference is clear. Using Tilson's EasyBuy Program to finance building your new home can save you thousands.