Getting a construction loan - Steps to make before making your dream house

With the advancement of technology on today’s world, it is possible to take out a construction loan from the best banks and financial institutions after signing your documents with your local company or escrow office. However, you must be aware of the fact that not all construction loans are created in the same manner as each loan has different kinds of terms and conditions. Just like any other product, there are good loans and bad loans and there are also loans that suit your affordability too. You must make sure that you consult your home builder and take out the best construction loan in the market so that you make the best use of your money. Here are some steps that you can take in order to get a construction loan.



1. Know all your options before choosing one: Before you settle on a particular loan, make sure you know all your options so that you do not repent later on. The construction loans that are available nowadays vary from 30 year fixed term loan to 15 year, 1 year ARM, 7/1 ARM, 5/1 ARM, 3/1 ARM and also interest-only loans. You have to pay a set of closing costs, and loan origination fees so as to complete the process of getting the loan.

2. Get pre-qualified for the loan: When you get pre-qualified for the loan, you can easily determine whether the requested loan amount is within your current budget and affordability. You can also get to know the monthly mortgage payments that you have to pay when you repay the loan throughout the amortization period. While you take out a construction loan, you need to tell your lender about the entire story regarding the reason and what you want to do after you construct the property.

3. Shop around for the loan: You must shop around for the construction loan so that you get the loan with the best interest rate in the market and that which is within your affordability. Get quotes from at least 5-6 mortgage lenders and choose the one that suits your affordability and needs.

Thus, when you take out a construction loan, consult with your home builder so that you know what you need and what you don’t. Don’t waste your dollars while getting the loan as you must value your hard-earned dollars and store them for repayment purposes.