How To Take Out a Home Construction Loan

It is a common fact that when looking for our ideal home, we may not be able to find one which fits our desired requirements in an ideal home. Finding a new home can be a very time consuming and often, disappointing thing to look into, which is why now more than ever we are looking into building our dream homes. This can be a painstaking task as many different factors need to be taken into account in order for this to be made possible. You may have already found the perfect piece of land for your house to be built on, but with this comes a whole new list of things you need to do to get your plans put into motion. Some potential home owners may look into using builder finance home constructors, but these can bring too many risks to your building plans. It is for this reason, that many financial planners advise on a home construction loan to see your dream home become a reality.

Step 1

When enquiring about taking out a home construction loan, it is imperative that you shop around in to what different lenders can offer you in terms of a loan. Many people who look into taking out these loans often look for a lender who can offer them a combination loan. A combination loan will primarily begin as a construction loan, and during this initial period, you lender will make payments to your constructor as they achieve different stages of the building of your home. This will continue throughout the whole process of the building until your home has been completed.

On completion, your lender will then turn this loan into a normal mortgage. The way in which this will work as a whole is that your new loan will pay off the remainder of your construction loan, with the remanding money going to the assessed value of your new home. When looking for a lender, it is very important that you only go ahead with a lender you feel you can trust. More often than not, a lender who is open to all questions and queries you have and leaves you feeling at ease about the whole project is the one to go with. They should be explanative about all aspects of how your loan will work and how to make the re-payments, and they should be easy to contact if you have any issues at any time.      

Step 2

One of the reasons that taking out a home construction loan has become so popular recently is that they are completely different from mortgages which are why they are handled differently in their initial phase. They also allow you to save money as you will not be required to pay a second set of closing costs as you would with most other loans. By handling all deals at the same time, you not only save money, but also time, which enables to construction of your new home to start off quicker than usual. When looking into finding a lender, there are three common ways in which you can do this to find your ideal lender.

As with many different aspects of business nowadays, you can try and obtain a loan online. If you have previously shopped around and found a suitable lender, you can begin your application process via their website if they have one. Once you have filled out the necessary information, a member of their team should contact you either via a letter or a telephone call after which, you will be required to meet with the lender in person so the loan request can be officially made.

If you would rather speak with someone face to face throughout the whole process, you can visit your desired lender by visiting your bank of choice. Here, you can ask to speak with one of their loan agents who will go through the whole process with you and commence with your application if both you and he are satisfied.

Finally, you can contact your ideal lender by phone if you would prefer. This is typically not a common method as communication can become confused and not all details may be able to be discussed over a telephone due to security reasons.

Step 3

It’s important to be aware that whenever you decide to take out a home construction loan that the lender will require an explanation of where your loan is going towards. It is a good idea to take any plans for the building that you have with you to your initial meeting, along with records of your financial situation so they are able to get a grasp of your financial situation as a whole.

This phase of the loan can take a long time to be completed, but the beauty of these types of loans is that as they are usually much shorter than a typical mortgage, you could soon be living in your dream home with no worries except how to decorate your new surroundings.

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