How to Apply for a Home Construction Loan
A new home construction loan is a source of funds for you to erect the house of your dreams. Home construction loans are different from home loans on the basis that they allow you to be part of the setting up of the house, unlike the other type where you use it to buy an already constructed house.
A home loan normally begins charging you interest from the start. You are subjected to that on account of the fact that the house is complete and so no need to wait any longer. It is not the case with a home construction loan, since the house needs first to be there. You therefore make payments without interest being a factor. You will be given a year for the construction to be completed since the time you received the loan. The moment the house is complete, the permanent loan amount kicks into effect, with the interest rate being added.
The beauty of this loan is the fact that the discussion and agreement happens once. You then receive the funds in bits throughout the construction phase, with the total at the end being the loan amount. You get to enjoy loan amount and its payments, not separate loans as per the number of cash injections during the construction phase. You will find it to be more convenient since there is only one set of paperwork, and one recurring payment to factor in your budget. There is also the deciding on the loan interest at the beginning, a figure that remains in force for the entire period.
The loan will be based on the future value of the house. There will be an appraiser who will use various points to arrive at the figure. They look at the kind of house to be built, the materials to be used, the cost of those materials, the labor costs involved, the cost of the land used in the construction and its present value, and the overall cost of the permits and planning services.
You have to carefully choose the general contractor for this project, and look keenly at the details in the proposed contractual agreement. Only then can you proceed with the plan for the building. You will have a successful process only if you take into consideration those steps.
There is a deep sense of satisfaction that comes with putting up a house right from the start. You need to be keen on all parts of the process, especially the loan application. When you need professional help in the process, you can visit this site. You will find it to be a great resource, touching on matters such as construction funding, land and spec construction funding, construction financing, new home construction loans, and new construction funding.