picture of house finance by home construction loanWhile purchasing a used home or cookie cutter home from a real estate developer is fine for many people, others want either a newer home or more unique home. For these people, the best option is to have their own home built from the ground up customized to the homeowner’s liking. To build their own home, many people are forced to rely upon a lender to supply a home construction loan. While getting a traditional mortgage can be somewhat simple, obtaining a home construction loan can be quite difficult, time consuming, and tedious if you do not have the right team of experts by your side to help you. That is the reason we created constructionloan.net, to help you fully understand the process and be as informed as possible prior to proceeding!

The first step in obtaining home construction loans is preparing for your loan application. This process can be more difficult than preparing for a traditional mortgage. To get a home construction loan you will typically need to perform the following steps:
1.) Secure property to build your home on.
2.) Obtain all local land use permits for construction.
3.) Retain an architect to develop architectural plans for your new home.
4.) Hire an attorney to prepare necessary legal documents.
5.) Hire a contractor to complete the construction of your home.
6.) Prepare a construction budget and construction timeline.

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pic of home financed by fha 203(k) loanThe Department of Housing and Urban Development (HUD) created the FHA 203(k) to fix rehab homes and remodel old ones. They used to have the top construction and rehab loans until major lenders stepped up and offered better loan programs to customers. Now that credit requirements are tighter and loan limits are higher, the FHA 203(k) is getting more of the attention it is accustomed to.

What is FHA 203(k)
This program stands out because it not only allows single family through four unit homes in the program, but condominiums as well.

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Steps to Increase Your Credit Score

Credit will affect your ability to get a construction loan. For the credit-challenged, this means working hard to clear up bad debt. There are steps to increase your credit score.
Begin with your credit report. It is a good idea to check your credit report every three months. If you cannot afford it, then go to [...]

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Typical Draw Schedules of a Construction Loan

A draw schedule is an agreement between the homeowner, builder, and lender in regards to when funding is disbursed. A typical draw will release funds for projects as they are finished. There are usually four to six draws in a construction loan, but the total depends on how large the building site is. Each draw [...]

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Should I Lock in My Interest Rate or Let it Float?

Applying for a construction loan can be made difficult when deciding on whether or not to lock in or float your interest rate. There are factors to consider before making a decision.
When you first become approved for a construction loan, your interest rate will most likely be based on what type of loan it is. [...]

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Draw vs. Vouchers

Now that you have the approval of your construction loan, how do you receive it to start building your new home? There are two ways the funds are released to the builder: the Voucher Reimbursement system and the Draw Reimbursement system.
The Voucher Reimbursement System
This old system has been in effect for quite some time. Lenders [...]

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Commercial Loans

For large business managers and small business owners alike, commercial loans are a huge part of the process. In order to do business in today’s world, you have to have access to money on demand. When you have a big time expense, it is important to find commercial loans to handle that need. There [...]

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Why Are Loan to Value (LTV) and Loan to Cost (LTC) so Important?

Qualifying for a construction loan requires a good credit score and the ability to pay it back. What many homebuyers do not understand is that there is more to know than just the basics. A good rule of thumb to follow is to ask if you do not know or understand. For instance, loan to [...]

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Should you Hire a Builder or be an Owner Builder?

Owning a home is quite an achievement. It is the American dream for many families, which only gets better when you design and build your own home. Building your own is a great responsibility but there are questions you will have before undertaking the job. What pros and cons should you know about before committing [...]

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What are the Typical Steps in Qualifying for a Construction Loan?

Time and time again we are asked what the typical steps in qualifying for a construction loan are.  As such, we have written this article to shed light on the loan qualification process and have included all of the pertinent steps from beginning to end:
Income Verification
You will need to verify your income by providing copies [...]

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