Construction Loans How They Work

Construction loans how they work in a Nutshell

1. You need to own land first in order to obtain a construction loan. The reason you need to already own land is because the bank is going to want a set of house plans and permits. Unless you purchase land that comes with a set of plans you should obtain a land loan 1st until you are ready for the construction loan and its requirements.

2. You need to find and hire a builder to provide you with a cost breakdown unless you are an owner builder. The best banks with the best interest rates and programs usually require that you hire a home builder/contractor or manager/contractor.

3. The owner builder banks that specialize in owner builder loans are usually single close construction loans with average loan programs.

4. You will need to apply for a construction loan with a broker or a bank. No matter who you pick to work with make sure they are a construction loan specialist. A experienced broker can tell you the banks that are actually closing construction loans and which banks are not.

5. Most lenders in todays market require full documentation, tax returns etc.

6. A typical construction loan full approval takes about 45 days to closing.

7. Most construction loans today are one time close construction to perm with one set of loan fees.

8. The type of construction loans available are fixed arms and the standard 30 years fixed loans.

9. Your credit score needs to be in the high 680’s or higher in the 700’s.

10. The construction loan period part of your construction loan is usually 12 months to 18 months.

11. Upon completion of the building of your new home the loan will convert into the permannent part of the mortgage.

12. You will need construction insurance during construction and homeowners insurance upon completion.

13. You will need to move into your new home and and are required to live happily ever after

Thanks,

Rick Gomez

CaliforniaConstructionLoans.com and NationwideConstructionLoans.com

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