My husband and I are 1st time homebuyers. We have been preapproved for a house loan, but are not having luck finding what we want. We have toyed with the idea of building our own. What are the differences between getting a preapproved loan and buying a already built house and going through getting a construction loan? Do you have to put money up front for a construction loan? Do you make mortgage payments while the house is being built, or do you wait until the house is completed? Is there a time frame that the house must be built within? If we were preapproved for a certain amount with a homebuyers loan, would we likely be preapproved for the same amount for a construction loan? What other differences should I know about? Since we are first time homebuyers we do not have much collateral (we do have some savings, but not a ton), would that affect our ability to get a construction loan?

Your pre-approaval only applies to the loan type you requested. If you change loan types you must be pre-approved again fot that specific loan type.

The most favorable option for you is called a "Construction/Premanent" or "One Step" loan.

This loan combines both the construction loan and the permanent loan in one package so that you are not paying two sets of loan fees. Not all lenders offer this option so you may have to shop for it. If you will let me know which state you are in I can help you find a lender who offers this program.

Your minimum down payment will be 5% of the sales price of the land and proposed construction costs combined. In addition, the lender will require you have sufficient funds for closing costs and, some lenders may require you have a reserve fund sufficient to cover any overruns or upgrades. This reserve fun does not have to be liquid. It could be your 401K. Some lenders will allow you to finance the estimated 5% reserve requirement if you put down a 10% downpayment.

The loan works like this:

The appraisal is completed using plans and specs to determine completed value.

Your builder supplies materials specifications and a construction/draw schedule.

The draws against the loan are given to the builder based either on percentage of completion or on a line item basis. Most lenders make the draw checks jointly payable to you and the builder so that you may maintain some control.

You pay interest only payments on the funds as they are disbursed to the builder at whatever rate the construction term is set for.

At the end of construction the loan converts to a permanent loan. This process will vary a bit from lender to lender. Some convert you at the same rate as your construction loan, some offfer you a float down option, lots of vartiety here.

The normal construction term will range from 6 months to a year or longer on a big project.

Good luck.

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http://www.DIYownerbuilder.com

construction loans for owner builders, builders, and developers. Though we specialize in owner builder construction loans and consulting, we can help builders, land developers, and commercial builders.

Construction to Permanent Loan –
Construction to Permanent loans, also know as C2P and Construction to Perm loans, is a loan that allows you to build your own home and finance the land, construction loan, and permanent mortgage upon completion of your build.

We specialize in helping owner builders with construction loans and consulting to help them build their own home without the need for a general contractor.

Construction Loans Available-
-Builders, less than 4 years experience ok.
-Owner builders, no site supervisor.
-Up to 100% Financing.
-Owner Builder 2-4 Family loans
-Owner Builder Non-Owner-Occupied loans.
-Up to 90% LTV
-One Time Closing Construction to Perm
-Commercial Construction
-Renovation loans up to 90% LTV

Construction to Permanent Loans
Construction Only Loans
Land Development Loans
Builder Construction Loans

Stated Construction Loans
No Doc Construction Loans
New Home Construction Loans
Bad Credit Construction Loans

-Some areas require a 10% downpayment for our owner builder programs construction to permanent loans. The good news is, you can use your land equity if you own the land or you can cross collateralize your existing home as a down payment if you have equity.

Construction to Permanent Loans are hard to find these days, but DIY Homes, LLC has invested time and effort into making sure we have a decent supply of lenders to provide construction loans to our owner builders and construction loans to our builders and developers.

We look forward to speaking with you about construction loans. Please go to our website link found above and we’d love to help you find the perfect loan.

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It seems that interest rates are much lower for refinancing existing loans, as opposed to new loans. I have a construction loan which doesn’t expire for a few months, would it be better to refinance the construction loan to a permanent mortgage or do a construction to permanent conversion loan? Which will get me a lower interest rate?

Generally the lender will lower the rate when you convert and the closing fees will be lower.

I’d start with my current lender

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A construction loan works by providing the builder with a loan that allows for several small draws for different stages in the building process. Take out a permanent construction loan for the mortgage of a building once it has been built with advice from a registered financial consultant in this free video on loans.

Expert: Patrick Munro
Contact: www.northstarnavigator.com
Bio: Patrick Munro is a registered financial consultant (RFC) with outstanding sales volume of progressive financial products and solutions to the senior and boomer marketplace.
Filmmaker: Reel Media LLC

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If you wanted to build your own house, would you apply for a construction loan? What are the terms of a construction loan? How hard is it to get one?

Yes you want a construction loan and one that can be converted to a permanent loan. Why? During the construction process the builder is entitled to a draw (of money) at predetermined stages. Also, with a construction loan you only pay interest on the money that is drawn. When the home is completed you then need a permanent loan.

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Info needed if you are looking to build a home or renovate a home you currently have, here is some info on construction loans. More info at www.marketposter.blogspot.com

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