Build the House of Your Dreams with Construction Loan Center
Construction loan center is now gaining traction among individuals all over the world. It is going to be a smart idea to take time learning about this structure especially if you want to build a house and currently in need of financial help. On the other hand, prior to joining the bandwagon and get a loan, it is vitally important that you have thorough understanding of the loan.
So what’s with a construction loan offered by construction loan center? Well, it is basically a short term, interim loan used to finance the construction cost of your dream house. The credit providers or lenders are going to secure mortgage over real estate property that you are financing and also, they are going to create periodic payments to the builder or the house developer at periodic interval. And everything is happening while the work is in progress.
Keep in mind that construction loan center follows different requirements and credit policies follow different set of credit policies and requirements when processing loan application. Majority of them on the other hand are basically the same. By reading the next paragraphs, you’re going to know about how credit providers or lenders fund the construction loan.
Number 1. These entities will be funding the amount of loan required by the client to be able to cover the entire cost of buying vacant land as well as the cost of building the property.
Number 2. Prior to the start of construction and if you have borrowed money to buy the vacant land to which you will be building your new house, the first loan disbursement that is made by the construction loan center will pay off the vacant land first.
Number 3. The providers are going to breakdown the amount of loan into progress payment drawdown amounts. This will be made to the builder at completion of every stage of construction.
While the construction loan is almost the same with conventional mortgage, it comes with several differences like the fact that it is usually a short term solution with a max of 12 months, the borrowers are expected to pay the interest during the period of construction, the interest is calculated against the portion of the money borrowed and been drawn down, the construction of new house should commence within 1 year of loan settlement and the construction of the house has to be done within the same year of first progress down payment.
The construction loan center are going to arrange everything to prepare valuations before progressing payments to the builder. This will be done at every construction stage from buying of vacant land, laying of flooring, installation of roofing including the frames, lock up stage and lastly, the completion stage.