How do Construction Loans Work?
A construction loan finances the following:
•1. The land
•2. Land improvements -i.e. clearing, grading, utilities, etc.
•3. Actual construction costs
•4. Finishes to the home - i.e. carpet, appliances, tile, etc.
•5. Architect or engineering fees
•6. Permits
•7. Interest Reserve account to pay your mortgage during construction
•8. Closing costs (in most cases)
A one-time-close construction loan modifies to a permanent mortgage when the home is finished. So, you can finance the initial purchase of the land plus the cost of building your new home. You pay just one set of closing costs and you are only approved once!
Rate and terms can vary, just as with a conventional loan. You get to choose what type of loan you want when your construction loan converts to permanent financing. Choose from a 3 or 5 year ARM, or even a 30 year fixed loan.
Construction loans are easier than most people think, it just takes a little more time to learn the process. In it's simplest form... you work with an architect to design the house you want, you work on the cost to build the home, you choose your land (if you don't own it already), you obtain financing like any other loan, and watch your house be built! By working with a licensed General Contractor, you will have someone to oversee the entire building process.
Most people never even consider building their own home because they are afraid of the unknown. What they also never consider, is the instant equity you get. Or the pride of building your house exactly how you want it. Sure it takes a little longer, but good things come to those who wait!
Katie Marchione
Community First Financial, LLC
7575 E. Redfield Rd. Suite 235
Scottsdale, AZ 85260
480-305-8900 xt. 315
480-393-8801 fax
888-542-2288 toll free
http://activerain.com/action/blogs_admin/write/www.communityfirstfinancial.com
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