Home Loans
3 Things To Know Before You Get a Construction Loan
(presented by www.refinance-refinance.net - mortgage lenders)
By Carrie Reeder
Maybe you have a “dream” home in your mind that just isn’t on the market, or perhaps you’ve already picked out the perfect piece of land–but it still needs a house. If so, chances are you’ll need a construction loan to build your new home. But there are a few things you should know before you get the loan, such as:
IT’S SHORT TERM
Unlike a regular mortgage, which typically has a term of 15, 30 or even 40 years, a construction loan is short-term. Generally, the loan term is 6 months to a year, and the money is used to finance the building of the house. If you’re looking for a construction loan, make sure you find a lender that will “lock-in” your rate during the loan term, so you don’t have to worry about your costs rising during the construction of your home.
IT’S DUE ALL AT ONCE
With most mortgages, you pay off the loan a little bit at a time in the form of monthly payments. With construction loans, however, the entire balance is typically due at the end of the loan term once the house is built. That means you need to either have a cash reserve that you can use to pay off the loan when it’s time, or you have to get some other type of financing or loan to cover the balance. Known as “permanent” financing, this type of loan requires a new application, and you’ll have to pay closing costs and other fees. In some cases, you can get a combination of a construction loan and permanent financing so a second application and extra set of fees is not required.
Most people assume that they receive the money from the construction loan, and then it’s their responsibility to save it and use it to pay the home builder. However, although it is your responsibility to disburse the funds to the appropriate contractors or subcontractors, you won’t receive the funds in one lump sum. Typically, the bank will give you a certain amount of money periodically based on the percentage of work that’s been completed on the hou!
se. Here
is a list of recommended Construction Loan Mortgage Lenders online. It’s important to use a reputable lender online to make sure your personal information is secure.
If you want to build a home, a construction loan is almost a necessity (unless you have significant savings). But there are differences between a construction loan and a typical mortgage loan, so be sure to talk to your lender for more specifics.
ABC Loan Guide, a loan information website owned by Carrie Reeder, can give you valuable information about New Home Mortgage Loans, and also help you find a lender with free Mortgage Quotes Online.
===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================
Technorati Tags: mortgage refinance, refinance, home refinance, bad credit refinance, bad credit mortgage refinance, loan refinance, home loan mortgage refinance, mortgage refinance information, refinance mortgage, home equity loan, home equity loans, equity loans, debt consolidation, debt consolidation loans, debt consolidation loan, consolidation loans, credit card debt consolidation, credit card consolidation
