Thus A Home Construction Loan Is Also Known As A Story Loan

Category: Finance.

This article will outline the basic elements of a home construction loan.

Living in a house that is self- owned, is every ones dream. Learn the difference between a regular mortgage and a home construction loan as well as the financial requirements needed in order to attain money for construction. Different people work together to construct a house, thus it becomes necessary to pay all those helping hands. It becomes tough to pay all the money at one time. Moreover, the cost of raw materials and interior d�cors cost much. Thus taking construction loans from the banks and loan lenders, and paying it back in installments is the best option. Thus a home construction loan is also known as a story loan.

A home construction loan is one where the lender has to know the story behind the construction of the house before sanctioning the loan. People often want to custom design their own house since it s difficult to find a home that meets all the requirements. Construction loans are not paid all at once. A construction loan finances the building of that new home. They are drawn out in five to ten intervals depending on the stage of construction like pouring the foundation, installing heating and, framing cooling systems, and plumbing systems, wiring, installing cabinets, and the finishing, flooring and fixtures work like painting and carpeting. There are" construction- only" loans where only the building of the home is financed.

Construction loans are mostly sort- term loans. You then can search for another lender for meeting the other requirements. Sometimes the mortgage rate can be locked for 12 months during construction, thus avoiding the risk of raising rates. The" construction- to- permanent" loan can be converted into a standard loan by the same lender, once the borrower has a certificate of occupancy. Some of the lenders offer a float- down option which allows the borrower to take advantage of the rate dips. Once the cost of construction is estimated, you must find out how much you qualify to borrow.

It is necessary to calculate the cost of construction to take the loan. The pre- qualification offered by lenders will give you an idea on how much you can borrow. Know accurately about other fees and closing costs, terms and the required monthly payment amount. A home construction loan, like any other financing, requires research and preparation. The number of bedrooms, size of the, their sizes dining room, carpet, tile, bathroom and kitchen fixtures, color of rooms and tiles are the various factors that one should keep in mind while construction their own house.