Building Loan
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Building loans are available to the consumer who wishes to build that dream home, for those wanting to expand their businesses, or to the person who wants to add an addition to an existing structure. These contracts can be found by doing a search on the Internet. Many lenders who advertise them offer low competitive interest rates. A building loan is not difficult to qualify for, depending upon the borrower's income and credit history. One of the first considerations to seeking a building loan is to decide where to build. Researching sites or developments as well as property values is a good way to start. Another consideration is to find a good contractor. Some mortgage companies have an extended network of contractors to choose from and will offer assistance in selecting a reputable builder. The next step would be to have plans drawn up of the dream home. A good contractor will be able to answer many questions about the construction process and everything that it entails.
Mortgage companies that offer building loans usually have several programs to choose from. Programs include owner-builder, construction-only, custom-loans with contractor, less-than-perfect credit loans, and remodel or addition loans. An owner/builder loan means that the borrower is responsible to oversee the construction of the property. An experienced builder can act is his own general contractor and participate in an owner/builder program. If he chooses to hire a contractor, he can also take out a custom-with-contractor contract. Construction only building loans require approval of credit score, but no income or asset verification is needed with some lenders. Low fixed rates and no debt ratios are included in the calculations for construction only building loans.
A custom building loan that includes a contractor may require full income verification and offer a locked-in interest rate. A locked-in interest rate is set at the time of construction and is good for the entire time the home is being built, up to a certain number of days. This extended time period could range up to 360 days. Some lenders offer a one-time float rate on a locked-in rate. This allows for one fluctuation in the interest rate during the construction process. This might prove to be advantageous if the interest rates go down after the rate is locked on. Most contracts offer one closing fee, rate protection, quick approval, and no payments due until after the building is complete. Psalm 127:1 says, "Except the Lord build the house, they labour in vain that build it." For the believer, the real construction is in his heart where the Lord is building the image of His Son, Jesus Christ. That means that as believers, our goal is not in erecting an edifice, but in glorifying God through our business or our personal finances. We may be excited about starting construction after receiving the contract, but our greatest excitement should be in building a testimony with our lives to our Lord.
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