Building home loan
Home building loans are also called as home construction loans and are provided for the purpose of construction of homes. There are many types of lending institutions that provide home building loan to people whether they wish to rent the same or live in it. home building loans are sometimes called as story loans also as lender would like to know about the construction planning a person has. Thus, these loans are not standardized loans as are mortgage loans. These loans are always provided as secured loans.
There are many features of home building loans that should be understood by a person at the very outset. First of all, these loans are generally interest only loans. That is, a person is required to pay interest only during the construction period and after this period is over, he is required to pay towards principal. Thus, unlike other mortgage loans, principal payment does not get started in the very first month and this helps a person in utilizing money towards construction. It is important to note here that in terms of home ownership, completion of construction means certificate of occupancy.
Home building loans are provided as fixed rate mortgage loans or as variable rate mortgage loans. Generally, land over which home is to be constructed, is held as collateral and in case of non-payments by the borrower, lender can sell this land for realizing the loan amount. This is the reason why many experts feel that a person should go for these loans only when he is confident about his present and future monthly income. Another important feature of home building loan is that repayment schedule is drawn as per the requirements of the borrower. That is, money is withdrawn from the home loan account in stages as per the requirements and in some cases, borrower may also be required to produce invoices, bills or receipts of earlier sums disbursed. Another important aspect attached with home building loans is the percentage of project cost that is provided as loan amount. It varies from one lender to another. If any person already owns a piece of land, it can be considered as equity with respect to the home building loan.
In case of adjustable rate home building loans, interest rate is applied with relation to spread over the prime lending rate or some other short term interest rate. Interest is charged in the loan account on the basis of amount disbursed by the lender up to any date.
It has been observed that most of home owners in United States consider construction-to- permanent financing. In this type of home building loans, construction or building loan is converted to the mortgage loan. This is done after the borrower has produced the certificate of occupancy. Advantage of this type of facility is that a person has only one application as well as closing. In some cases, borrower can also buy rate lock agreement from the lender on basis of interest rate trends. This agreement is valid throughout the completion of construction.
A person must understand here that home building loans are not like mortgage loans where a person can make payment over a long period of time. It should be tried to repay the loan in shortest possible period so as to save good money towards interest. In case of construction to permanent financing facility, a person must try to get high rate short term loans.
Some sources of home building loans
Let us discuss some sources of home building loans to understand more. Build Max is one of leading owner builder consulting services in United States and offer different types of services. home building loans are provided through owner builder programs. A person can get required loan amount without making large down payments and can also keep the construction costs low. Construction support is provided throughout the process and in some cases, equity take place of large down payment requirements. In most of cases, a person can easily get finance up to 95% of the construction cost. It also offers 12 month construction loans. Interest rates are most competitive in the industry and no payments are required through the building process. A person can choose from fixed and adjustable rate mortgage programs offered up to a period of 30 years. One time closing facility is available and approval is provided in as less as 24 hours.
Owner Builder loanservices is another source that can be contacted for getting home building loans in United States. Construction loans are offered for owner build homes. These loans are provided to people who are building house for own use as well as for rental use, without any general contractor, by using own labor, etc. home building loans are also provided to those people who have already started the construction work. Similarly, these loans are provided to people going for dome or modular construction by using timber frame, kit, log etc.
Construction loan provided by this source makes building new home very easy. It specializes in providing residential construction loans for owner builders and providing loan amount for self built homes is the specialty of this lender. It has been providing finance for more than 20 years. No materials, blue prints, advice etc is sold by Owner Builder loanservices and its main objective is to provide construction loans that do not require hiring of project supervisors or contractors. Conventional built homes as well as log homes are also considered. In fact, home building loans are provided for all types of residential homes. Being a private funded source, all loans are closed in a fast manner. For getting more information, a person can easily call at 800-543-5600.
Apart from above, a person may also contact leading financial institutions and credit unions for fulfilling requirements.