Having your dream home built can easily be one of the most important events in your life. It is only vital that you use all of the resources that you can acquire to make everything go smooth as planned. This will help you have your house built within schedule.
American Loans explains how a good construction loan can help you get your dream home.
What a Construction Loan Entails
Construction loans are usually short-term loans that can help pay for the expenses involved in building your home. Most banks are reluctant to provide this type of loan. This type of investment involves putting money on something that is not there yet; hence, they tend to be wary of lending money.
This is where a construction loan comes into play. In Utah, for example, loan companies may require that a qualified builder be tapped on building your home. By having a professional builder work on your house project, your home can have higher value and will likely be sturdier and more durable. Aside from this, the specifications of the whole house are also important. Floor plans, ceiling heights, and other relevant information such as the materials that would be needed in building your home must also be presented. From the specs of the house, an appraisal can be made so that the value of the house can be determined. On top of it all, you would have to put down a down payment, at least 20 percent of your overall loan as assurance that you would not disappear when things go wrong during construction.
Types of a Construction Loan
There are two major types of construction loans, the one-time-close loan and two-time-close loan. One-time-close construction loan is the most popular type of loan for consumers. It covers all the loan and mortgage of the completed project into just one loan. Two-time-close construction loans, on the other hand, involves two separate loans: short term-loan for the building phase and then permanent mortgage loan on the completed project.
Weigh your options and determine the financing options or assistance you can use. And if you decide on a construction loan, be sure that you’re going with a notable company. It’s going to be a big commitment, after all, so you need someone you can trust.