Are you planning on moving to a new property and build a house of your dreams for yourself and your family? Are you wishing for enough space for your kids to grow up in, while maintaining some privacy for your family life as well? Well, to bring such dreams into reality, you need to start off on a strong financial base, and one way to guarantee that, would be to get a proper home loan. Nowadays, a lot of people are approaching banks and other financial institutions to acquire the loan that they would need to acquire new property to construct their home. Once you start looking for the right kind of loan, you will see there are different options available.
What are Residential construction Loans and how many types of it are there?
Residential Construction loans are also named as “story loans’. They are not exactly like mortgage loans. If you choose to opt for residential construction loans, you will have to provide your lender with all the details on construction and the progress you are making.
Residential construction loans come in two different types:
a) One is called the construction only loans
b) The other is construction to permanent loans.
How to Apply?
In order to apply for home construction loans, you will have to go through a certain process that may prove to be a little taxing, if you are not prepared enough. Firstly, you will have to get your construction plans in order. And not only do you have to enlist all the details, so that your lender can take a good look at them, also, you will need to contact your builder, so that he could inform you, if any more crucial construction needs to be made and accordingly, how much loan you should apply fo. Also, there is a certain set of documents that you will require to file for the loan application. Your income proof, along with details on construction plans and specifications and their estimated cost have to be offered. Plus, you will need a settlement statement and copies of your assets and savings, which must include your account statement of the last 30 days, stock accounts and mutual funds. Finally, your lender will also ask you to give them the contact information of your builder.
How does the Lender give you the Approval?
Once the bank has decided that all your documents are in order, they will start combing through your construction plans. The main thing they will be looking for, is the possibility of success of achieving the goals that you have set for yourself, based on the amount of loan you have applied for. Once all that is set, the loan is sanctioned, and you can go forth with your residence construction plans.
You can go for Construction Only loan, if you are sure that you can finish building your house within a year. Or else, it is advised that you go for construction permanent loan that will convert into a mortgage loan, at the end of the period of construction. Finally, after the construction of your home is over, you have to obtain a certificate of occupancy and then you can move in with your family to enjoy your new life!