The Process of Getting a New Construction Loan
Tuesday, January 1, 2019, 6:00 AM | Leave Comment
Before getting the funds you need to cover the costs for your construction project, you need to know what to expect.
There is a process that you need to follow so that you do not find yourself at the short end of the stick.
Patience, in this case, is crucial.
This process will involve these three steps:
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Finding the best builder
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Getting a construction loan
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The construction process
Here is a simple guide to help you with funding your new construction project.
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Search for a good agent
An agent that works with your builder of choice gives you some security and someone in place to help you avoid contractual complications later. Your agent should be someone who has vast experience in negotiating new construction deals. Before making the decision to approach lenders such as https://www.normandy.com/, you should be well prepared.
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Have your credit sorted out
Many lenders will want to know what your credit score looks like. It is therefore wise that you have it checked out by the necessary credit bureaus and to get your score secured with at least one of them.
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Get your financial documents in order
The lenders will also be interested in perusing documents detailing your daily expenses and financial history. This includes your annual income, total debt, assets and investments and 401k funds.
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Get pre-approved
The next stage is finding out how much you can borrow. Before you sign any documents, you must understand that you will need financing to cover both construction costs and the mortgage. The sum of money you get should be enough to roll to your mortgage payments once you sign up for a construction-to-permanent loan.
It may not be possible to get a construction loan with a mortgage company. You will therefore need to find a bank or other alternative lenders who will be willing to finance your project.
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Find competitive builders
Once you figure out what you can afford, you can find the best builder to work with. Naturally, you must interview a few before you choose one. You can find them online by visiting websites and reading reviews, consulting vendors, inspecting their previous work and may be even speaking to people they have worked with.
In the process of your interviews, you will learn about construction prices. You will even find out if builders provide financing and at what rates. You will need to be patient because you do not want to simply latch onto the first one you find. Comparison is important.
You should concentrate on reputable builders who are known to complete their projects on time while adhering to the budget. Once you choose your builder, get a signed plan. Your builder of choice should have a blueprint that you approve of in a neighborhood you like. It should also fall within your pre-approved loan limit.
Once you have everything in place, you can then approach a lender in order to sign the necessary documents to get your funding so that you can finally get your construction project started and get closer to enjoying your dream home.
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