Home Construction Loans
A new home construction loan is funding that allows you to build the house you have always wanted. There is a major difference between a home loan and a home construction loan, in the sense that the latter allows you to determine everything about the house, while the former is one you use to acquire an already constructed house.
A home loan will need payments immediately, which have to be accompanied by the interest. Since the house is complete and its value is known, it is only right that the interest is charged so. It is not the case with a home construction loan, since the house needs first to be there. You are therefore left to make payments with no interest charged. The condition placed on the loan is once you receive it, you have one year to be done with the construction. As soon as the house is complete, the permanent loan starts with the interest agreed upon included.
The beauty of this loan is the fact that the discussion and agreement happens once. They will then disburse the loan in bits as you continue construction, with the final amount being charged at the end. There will only be the one loan to pay, consolidating all those separate disbursements you received. It makes for an easier time as there is only one set of paperwork, and one recurring payment to be made. You also get to agree on the applicable interest rate at the beginning of the process, which does not change later.
The loan is calculated using the future value of the house. That value is determined by an appraiser using certain variables. They look at the kind of house to be built, the materials to be used, the cost of those materials, the labor costs involved, the cost of the land used in the construction and its present value, and the overall cost of the permits and planning services.
You need to be keen on the selected general contractor, and the details contained in the contract you will both get into. Only then can you proceed with the plan for the building. When you remain focused on the steps in this process, managing to put everything together becomes simple.
Those who have participated in the construction of their houses right from the foundation report the process being most satisfying. There is a need for you to make sure you have everything about the loan application, and the construction well figured out. You need to make sure you are working with the right company in the process, by checking out this site. You will find it to be a great resource, touching on matters such as construction funding, land and spec construction funding, construction financing, new home construction loans, and new construction funding.