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Author:
Bev Dodd
Web Site: http://www.family-refinance-consolidation-loans.com
Construction
loan: Build your own home
Unless
you are one of the few who build with cash, the construction
loan is a necessity. The construction loan process can be a
trying one, research your needs before you apply. We'll discuss
this more below.
Before
you start scouting for a piece of land or an available lot, find
out what size construction loan you can qualify for and any
restrictions or limitations you may have to abide by. With that
information in hand, it's easier to find the land you need and
make an offer. Never make any commitments to purchase and build
or close escrow before you have solidified your financing needs.
It
is typical for interest on a construction loan to be a few
points higher than a permanent loan. But, you also want to
become debt-free sooner, paying as little as possible in
interest and other charges. You must therefore consider interest
and charges over the life of the loan. A low introductory rate
is of only limited benefit if you will be paying a higher rate
for the next 10 years. Also, beware of advertisements claiming
their loan is the best over the full 30 year period. Do you
really think you will still have that loan in 30 years time?
A
custom construction loan is a little more complex than a
standard mortgage loan, but they don’t have to be
overwhelming. Most people prefer an all in one construction loan
today – a loan that allows for draws during the construction
period and then rolls into the permanent financing once the home
is complete. If the home is finished on time, many lenders will
even refund some of their construction loan fee.
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