Build the House of Your Dreams with Construction Loan Center
Construction loan center is actually gaining popularity and attention amongst people. If you are planning to build the house of your dream particularly when you are in need of financial support, then it is going to be smart to know more about this. On the other hand, it will be very important that you have good understanding of what the loan is about just before you jump to the bandwagon and apply to get one.
So what is a construction loan offered by a construction loan center? Well, it is basically a short term, interim loan used to finance the construction cost of your dream house. The credit providers or lenders will be securing a mortgage over real estate property that you’re financing and they’ll be creating periodic payments to your builder or house developer at periodic interval. And everything is happening while the work is in progress.
The construction loan center has various requirements and credit policies that they are adopting when processing the loan application. Majority of them on the other hand are basically the same. Following is a quick list of credit providers or lenders fund construction loans.
Number 1. These entities are going to fund the amount of the loan needed by the client in order to cover for the entire cost of buying the vacant land and the cost of building the property.
Number 2. Before the construction commence and if you’ve borrowed to buy vacant land already to which you’re building your new house, the first loan disbursement that’s made by the construction loan center will pay off the vacant land first.
Number 3. Providers would then breakdown the loan amount into progress payment drawdown amount. At the completion of every stage of construction, this would be made to the builder.
While the construction loan is almost the same with conventional mortgage, it comes with several differences like the fact that it is usually a short term solution with a max of 12 months, the borrowers are expected to pay the interest during the period of construction, the interest is calculated against the portion of the money borrowed and been drawn down, the construction of new house should commence within 1 year of loan settlement and the construction of the house has to be done within the same year of first progress down payment.
The construction loan center are going to arrange everything to prepare valuations before progressing payments to the builder. And you must know that this will be performed from buying of vacant land, laying of flooring, installation of roofing including the frames, lock up stage and lastly, the completion stage, basically at every construction stage.