Congratulations on your decision to build a new home! Or maybe, you intend to stay in place but want to remodel your current one. In either case, there’s plenty to be excited about. Now it’s time to consider a construction loan for your build or remodel. Here’s what you need to know about the construction to permanent loan process:
Apply with a trusted financial institution.
You will need the same documentation that you would provide for a conventional mortgage loan.
- 2 months bank statements
- Last 30 days of paystubs
- 2 years tax returns
- Driver’s license
- Property lot information
- Builder’s plan and cost sheet
Your construction loan will cover the cost of the lot and the construction phase. This includes the building, architectural design, permits and other cost associated with the building of your custom home.
Construction loans are a line of credit. This line of credit is for paying the cost associated with the building of your custom home. It works just like a credit card. You make a charge as you need money to pay the construction bills. This charge is called a draw.
A draw request is completed by you or your builder.
The request is approved and signed by you and forwarded to the lender. Lender will review and send the inspector to your home.
Requested money will be advanced and put into your account. Like any credit card you will pay interest on the money advanced. The line of credit balance will increase as you take draws.
The payment of interim interest is made monthly.
Types of Construction Loans
There are two types of construction loans available to borrowers.
The One-time Close loan is a mortgage program that finances the construction, lot purchase, and permanent loan of your custom home, all wrapped up in a single mortgage with a single closing.
The Two-time Construction loan will require that you get approved for two separate loans. The first loan will fund the physical construction of your custom home and upon completion you will then apply for permanent financing.
Whether you’re starting a ground-up build or remodeling your home, Mid America Mortgage offers several types of construction loans to help you make your home the home of your dreams. Find out which one is the right loan for your situation. Contact Mid America Mortgage today to get one step closer to walking through the front door of your future home!