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How To Get Home Construction Loans

Written By: admin - Feb• 13•13

So, You Need A Home Construction Loan. Now What?

Home construction loans don’t have to be something to lose sleep over. If you’re planning on building your dream home from the ground up, there’s a few ways you can go about it.

There are banks willing to lend money for new home construction. Some of them even still use stated income loans to help satisfy your building needs. However, getting one of these is much different from getting the other.

Banks that grant new home construction loans are very picky. They need to know every possible little thing with the property that you’re planning on building. The banks that will facilitate this varies from large banks to smaller banks as well. What happens is they usually make you pay some form of interest on the loan for a year or so, allowing enough time for the house to be built. Once the home is built, you must secure a mortgage on the property.

Sometimes, there are pauses in the building process where the bank will assess how much more is needed to loan for the next draw. This is usually about every half of a year or so for larger projects. Sometimes, the lender will state that the builder’s loan will automatically turn into a mortgage upon completion of the home as well.

As for stated income construction loans; the process is a tad bit different. In this case, the person who applies doesn’t have to provide proof of their income. This type of person is usually a business owner, a person who can’t prove that they make money, or a person that refuses to share their income information with the lender. This type of borrowing usually gets very quick approval. However, the interest rates are usually higher, and the down payments are usually much higher as well.

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