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New Home Mortgage Corp can guide you through the construction process. We provide Construction-Perm Loans, Construction Loans, and even Builder Lines of Credit. Every Construction situation is unique. That means that the lender has to know the story behind the planned construction before they're willing to loan you money. Initially it's not going to be standardized like mortgage loans underwritten to Freddie Mac or Fannie Mae guidelines. NHM is always looking for builder-lender relationships which in turn help our borrowers.
There are some common features to a construction loan. Construction loans typically require interest-only payments during construction and become due upon completion. Completion for homeowners means that the house has its certificate of occupancy.
The construction period is usually priced at a spread to the prime rate or some other short-term interest rate. You, the contractor, and the lender establish a draw schedule based on stages of construction, and interest is charged on the amount of money disbursed to date.
Another variable in construction loans is how much of the project cost the lender is willing to lend. If you already own the land it can be considered as equity on the construction loan.
Many homeowners use construction-to-permanent financing programs where the construction loan is converted to a mortgage loan after the certificate of occupancy is issued. The advantage is that you only have to have one application and one closing. Depending on your view on interest rate trends, you could also purchase a rate-lock agreement valid through the expected completion of the construction. Just make sure you allow for the inevitable construction delays.
NHM has the expertise to help you avoid the common pitfalls. Our relationship with builders, designers and lenders will help take the stress out of building your dream home. NHM has an array of construction loan programs and will tailor the financing to your specific needs. Please call us to help you answer any questions. |
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