A Guide to Home Construction Loans
When it comes to home construction needs, the costs associated to this can be so high and as a matter of fact, it won’t be easy having the entire sum ready in hand for these needs. This is the reason as to why many will turn to mortgages and the other types of loans to help them finance their homeownership dreams.
However, in the event that you will be going for the building of your own home and not buying one, it is important to note that you will not in such a case be going for a mortgage and this is for the fact that most of the lenders will not lend money for things that are considered non-existent.
This however is no reason for you to despair as there is the alternative of going for the construction loans. In this post, we will be taking a look at some of the things that should be known of when it comes to the home construction loans.
By and large, when talking of a home construction loan, which is alternatively known as a homebuilding loan, we are referring to the kinds of financing options that are designed to pay for the costs that come with the building of a new home or house. In most cases, the construction loans will come offered for a specific term, in which it happens to be the case in most instances to be a year, so as to have the time to construct your home.
Once you are done with the building of the home and the home stands complete, you may want to consider going for a new loan for you to repay the construction loan. These are known as the end loans. But this said and done, note the fact that construction loans come of various types and some of the most common ones are such as the Construction-to-Permanent Loans and the Construction-Only Loans.
The Construction-to-Permanent Loans are the kinds that start out as financing to build the home. But instead of the loan falling entirely due as we have seen above when the construction is done and you have then settled in your new home, it is the case in a Construction-to-Permanent loan arrangement that the loan then undergoes a kind of metamorphosis and assumes the kind of arrangement there is in a traditional mortgage. However looking at a Construction-Only Loan, this is the kind that will only cover the construction of the home.
But these said and done, it shouldn’t be lost on you the need to ensure that you are working with the right lender like this company for the need for financing options for your homebuilding plans.