Construction Loans

It is but a fact that people should have a strong foundation about construction loans. Through this article, you will be guided about this matter. Most of the scenario nowadays when it comes to purchasing a house is that, you make your down payment and then you borrow money for the rest. In the event that you are really looking for a house, these construction financing options might actually help you.

Select Among the Three Options

There are actually three basic ways to finance your needs in constructing your home.

1. Builder financing- With this kind of financing, the builders will be the one to finance using the money of the firm. This thing is more or less the same as what we see in advertisements. All costs including the down payment will all be covered by the builder. The process is actually simple but the negative side is that, it is quite expensive. You don’t have to pay the interest for the money you borrowed for the mean time that you are settling everything for the builder will do that for you.

2. Separate Loans- This actually the oldest type of construction financing option that consists of construction loan and permanent mortgage. You may choose to have two separate lenders or just one lender. With this one, you will be asked to pay the interest every month, for basically six months to one year.

3. Combination Loans- With regards to this one, you need not to pay that much since it is a two-loan approach type of loan financing. If you actually need to close it, you can do that for one time. By the time you already receive the certification of occupancy, the loan will be shifted to mortgage. This is basically for security reasons.

Different Sources of Funds

You should really consider a source of funds that knows about you well so that the source could actually provide you with the things that you really need. It something you must first consider. It would really be a lot better to choose a local financing institution to help you. There must be reports to be submitted to the lender regarding the improvements. It would be necessary to actually provide proper documents necessary you want to buy a land.

Checklist

The following are some of the architectural drawings you may have for your building.

1. Door schedule 2. Window schedule 3. Cabinet details 4. Stair details 5. Wall details 6. Heating and air-conditioning plan 7. Roof framing plan 8. Floor framing plan 9. Plumbing plan 10. Preliminary sketches 11. Presentation drawing 12. Specifications 13. Plot plan 14. Landscape plan 15. Floor plan 16. Foundation and basement plan 17. Exterior elevations 18. Interior elevations 19. Electrical plan

A lot of lenders would really prefer those who have specifications for the constructions. Actually, it would really be necessary for the sub-contractors and builders to have a copy of the signed contract for the project. You should really consider these types of loan opportunities as your financial solution.

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