How to Build A Home with a Single Construction Loan in Edison NJ!!

By
Mortgage and Lending with TD Bank 466521

How to Build A Home with a Single Construction Loan in Edison New Jersey.

 

The tides are definitely changing. The appeal of construction mortgages are on the rise, as they give homeowners the perks of building their dream home with a single mortgage. With a construction loan, home owners can not only add luxurious amenities like swimming pools but also transform their properties onto stunning vacation homes. Major renovations such as adding an extra room or upgrading with an extension is also possible through a decent construction loan.

 

 

So What Exactly is a Construction Loan?

Construction loans are short term financing options that can cover the building costs while the construction in the home is in progress. The demand for these loans is steadily increasing, particularly because of the lack of inventory in most markets. Instead of choosing from the limited number of choices, a lot of people go for the more viable option of building their home and enhancing its value.

Why is the Demand for Construction Loans Rising? 

Mostly when homeowners need to expand their property or build their own home, they go for contractors who have their own financing to carry on the construction. At the end of the job, the homeowners can opt for a standard home mortgage. But it often happens that these specialty contractors don’t have front end financing of their own. In these cases, going for a construction loan is the only choice available. 

Types of Construction Loans!

There are different types and variants of construction loans, but the most popular of these is the construction-to-permanent loan. This loan covers all the building costs and then converts into a normal mortgage loan after the construction is completed.

The main advantage of this kind of loan is that it has one application and one closing, and it acts like a line of credit during the entire construction phase. It provides the borrowers with the cash inflow that they need, and only the interest amount needs to be paid during the construction period. Once that is finished, the borrower can proceed with the interest as well as principal payment.

 

However, despite all the advantages there are a few setbacks that make these loans a little difficult to handle. Some of these issues include:

Getting an Appraisal

Construction loans are usually approved after an appraisal by the lender. This can prove to be a disadvantage if other homes in the market are of a lower value, because the lender will then approve a lower value loan. To overcome the issues, borrowers have to make larger down payments which can sometimes be unaffordable. 

 

Higher Interest Rates

Most lenders offer construction loans with adjustable rates only. This means that the payment amount can increase in the future as the Federal Reserve resets the interest values. A lot of lenders also charge a higher interest rate for these kinds of loans, which are around a quarter of a percentage point higher as compared to private mortgage loans. 

 

Hidden Charges

Aside from the interest rate and down payment, beware of the extra fees and costs that will come with the loan! While origination fee is often charged as 1% of the total loan amount, some lenders may also charge a penalty if you pay off the loan early or go for a refinance.  

 

For help with Construction loans- how to build a home with a single construction loan contact Tony Busanich a loan officer with TD Bank, a portfolio lender from Maine to Florida. You can trust TD Bank to deliver a superior mortgage experience. Whether you’re purchasing or refinancing, we provide straightforward, easy-to-understand products and advice, allowing you to make smart borrowing decisions that meet your needs today and tomorrow. My web site at www.tdbank.com includes mortgage rates updated every morning. You can run different scenario that  include monthly payments, different programs and closing cost. Please contact me at 732-306-2231 or by email at anthony.busanich@td.com and on my web site at www.tdbank.com

Comments (16)

Hannah Williams
HomeStarr Realty - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-820-3376

Tony Busanich  This is a wonderful program and i will keep you in mind as you really are not far away 

Dec 05, 2021 03:05 PM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Hannah. The program work well for anyone looking to build a home.

Dec 05, 2021 03:20 PM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Tony Busanich very good report for building a home with single construction loan. I will share your contact information with a few builders in my area.

Dec 05, 2021 05:41 PM
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo and Home Specialists

Great explanation of a Single Construction Loan Tony. Home buyers need a clear understanding of all their options.

Dec 06, 2021 01:38 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Good Monday morning, Tony.

Take care, be safe and have an outstanding week.

Dec 06, 2021 03:54 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you John Pusa, for stopping by and sharing my information. The program is great if your building a home and looking for one fixed loan from the start of construction through completion and beyond. 

Dec 06, 2021 04:33 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Larry & Sheila for stopping by. Client who are building a home through a consruction should have all the options to make a clear and knowledgeable decisions. 

Dec 06, 2021 04:38 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Roy. Have a great week and wish you all the best. 

Dec 06, 2021 04:39 AM
Pat Champion
John Roberts Realty - Eustis, FL
Call the "CHAMPION" for all your real estate needs

What a great loan program for anyone looking to build. Thanks for sharing I hope you have a great week ahead.

Dec 06, 2021 08:30 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Tony, I almost missed this post, and great information for those building a new home.

Dec 06, 2021 09:45 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Pat Champion, I appreciate your comments and help with my post. Wish you all the best. 

Dec 06, 2021 10:02 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Joan Cox, Yes, it's a great program for building a home with one construction loan. Wish you all the best. 

Dec 06, 2021 10:03 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Tony and thanks for another interesting blog by you to share with us here in the Rain.

 

Dec 06, 2021 10:18 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thanks Will for stopping by. Wish you all the best.

Dec 06, 2021 11:04 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Tony, great information for buyers that would prefer to start from a dirt start!  

Dec 17, 2021 09:38 AM
Tony Busanich
TD Bank - Freehold, NJ
1-4 FAMILY HOME LOAN SPECIALIST

Thank you Joan, doing one closing for a construction loan is a great benefit to someone who's building a home from the start. 

Dec 18, 2021 08:19 AM