New Home Construction Loan
Provided By:
www.freerealestatecourse.org
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You can maximize your savings by shopping for a lender that can sell you a combination loan. This type of loan starts as a new home construction loan. During this phase, your lender cuts checks to your builder and their subcontractors throughout the building process. Once your home is almost finished, the loan changes to a traditional mortgage.
This loan pays off your new home construction loan and then transitions into a mortgage for the assessed value of your home. Here you only have one set of closing costs, which ends up saving both you and your lender a considerable amount of time and money, which can result in a preferred interest rate for your loan.
Because many banks let the commercial department of their business handle new home construction loans, while the consumer division oversees home mortgages, the best place for you to start your hunt for the best deal is with the branch manager, who can refer you to the department that his/her bank has chosen to handle combination loans. Construction loans require a good deal more oversight on the local level than traditional home mortgages.
The Benefit factor
One benefit of this increased local oversight could be that your commercial lender may be able to connect you to a lower rate for your mortgage, once construction is done and your loan changes. One drawback is the higher administration fee that a commercial lender will charge, because the building process requires step-by-step management from the lender. This fee could be as high as 5% of your home's value. However, time that your lender spends overseeing construction is time that you do not have to spend following around builders and subcontractors. However, over time, many banks will actually rebate much of your commercial loan's administration fee when the time comes to roll it over into the mortgage, because they want to keep your business. You may receive a personal mortgage with no points, or you may even receive rebate points that you can apply to the principal.
Whether you're building your first home, or a summer home, a retirement home, or you've just waited to build your dream home, the network of home construction lenders can finance your dream home. Interest rates are excellent now, and you can receive an instant quote just by filling out an online application.
Here are some features of a new home construction loan:
· No initial credit check
· Choice among terms ranging from 10-30 years
· Stable, fixed monthly payments
· Individualized quotes in 24 hours
· Personalized pricing plans
· Programs for poor credit or past bankruptcy
· Locked interest rates (optional)
· Complete list of documentation at closing
· Programs not requiring documented income
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