Construction loan is different from other mortgage loans. Lender has to know the head and till of construction before they lending money to you. So, you must gone through an interview by lender and submit your construction planning to lender for their verification. Nevertheless, if you wish to build your desire dream home, it's worth to put more times and gone through all these harsh loan process.
Like other products, these loans are not created equally. There are best loans, good loans and downright bad loans out there. In order to select the best offer, please take a look at the following tips :-
1) Figure out the options - The loan choices available in 15 years, 20 years, 30 years and many more. Looking for the "one-time-close" option, there are many options are like during construction period was interest only loan, after completion will change to conventional mortgage loan. If you take such option, you will need to pay twice of closing costs / finance fees.
2) Get the pre-qualify for the loan - This will prevent you run out of fund to complete the construction of home. Helps to determine the requested loan amount is within your budget.
3) Consider some interest reserve or contingency funds - Most banks and lenders have created this additional option to borrower, during the construction you may change some appliance or need some additional works.
4) Shop for multiple banks at your town - Talk to their officers in-charge, gather much information of these loans. And search related information online. Compare their offers thoroughly, rates, terms and conditions.
5) Listen to the experience broker who has done all of the homework for you and has direct access to hundreds of banks nationwide. They are the middle man of hundred banks, some banks even willing to offer better deal due to the volume of consumers.
6) Make sure you are dealing with experience and reputable lenders to avoid scams.
For more loans information and tips, please check out Various Loans Guide instead of Construction Loan
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