Did you know that you could get a loan to cover the cost of building your own home? It's true, although there is a lot of information involved in this. Instead of buying a home that is already built, you can buy empty land. This is great because you can then get the exact house that you had always dreamed about. Before you go out and apply for one of these home construction loans, there are some things that you need to know first. They can actually be fairly complicated.
Mortgage Versus Construction Loans
Mortgage loans are actually quite different from construction loans. For one, you need to buy a home that is already built for you to use a mortgage loan. Beyond that, home construction loans also have a different interest and pay schedule. While there are several different kinds of construction loans, most will require that you only pay interest during the building period of your home. After it is completed, you will then need to start paying off your loan in full. Mortgage loans are different because you start paying a large monthly fee, including interest, from the get-go.
Different Types of Home Construction Loans
There are actually several different types of these loans. As mentioned above, you could get a construction loan for your home that you need to pay back in full when you're done with construction. Unfortunately, most regular people can't afford to pay back a loan like this, especially when it totals $100,000 or more.
Instead, there are home construction loans that don't have to work out this way. These are called construction-to-permanent loans. These differ because the construction loan turned into a mortgage loan once the house is completed. In the end, this will save you a lot of money in monthly payments and interest. Be sure to talk to your lender to make sure that they offer this kind of loan.
These problems are prevalent in the industry, but not anymore. Yovza solves these problems with a web based platform that allows the project manager to oversee the project on any devise. This allows them to constantly track the progress of the project and also receive live updates for decision making, with real time reports and a community of construction stakeholders they have a higher control over the project. This allows them to build the project more efficiently and finish it on time.
Finding a Good Lender
While almost all local banks offer mortgage loans, that isn't the case when it comes to home construction loans. If they do, they often don't have enough choices or experience in the matter. Instead, you should try to get one of these loans from a national bank. You will have a much better chance of getting the best options this way.
You should also make sure that the lending officer you work with actually knows their stuff. Home construction loans can be very complicated. You need to work with a lending officer that has experience with these kinds of loans. Otherwise, you may not get what you actually need.