Home Construction Loans
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Home construction loans are designed to allow a borrower to build their own residence from the ground up. Mortgage companies offer two types of financing. Lenders may draw up an initial home construction loan at the beginning of the building process and then make a permanent one at completion. The borrower may have to re-qualify for the permanent loan and obtain an additional appraisal on the property. The interest rate could change if it isn't locked in or guaranteed on the initial agreement for the loan.
The second way that a lender makes home construction loans is by making a combination loan that becomes permanent upon completion of building. With this type of financing there is just one set of closing costs, no re-qualifying and up to 12 months to complete building. Some lenders will do either type of financing. At the beginning of the building process pray and ask God to bless it and to bless everyone that is associated with it. "And it came to pass from the time that he had made him overseer in his house, and over all that he had, that the LORD blessed the Egyptian's house for Joseph's sake; and the blessing of the LORD was upon all that he had in the house, and in the field" (Genesis 39:5).
Some mortgage companies try to make applying for home construction loans as simple and easy as possible. They understand that it is a big commitment for borrowers. Although, not too difficult, a home construction loan, like any other financing, requires research and preparation. Ask questions about the required down payment and total payoff amount. Ask the lender about other fees and closing costs, terms and the required monthly payment amount. Do not sign the contract if the monthly payment amount is more than is affordable. Pray about finding the best builder and financing when researching a home construction loan.
There are many decisions that have to be made when building a home. Consider how many bedrooms and bathrooms are needed. There may be some choices regarding the placement of rooms. What about the size of the living area and dining room? Some homes have a formal dining room for special occasions and family get-togethers. Home construction loans offer many choices on tile, carpet, paint, bathroom and kitchen fixtures, and much more. It is fun to look at color swatches and decide on details. To be a part of such a thrilling time is a once in a lifetime experience that everyone should take part in.
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