Navigating the Process of Obtaining a Home Construction Loan

Unlike the days before our country’s most recent recession, obtaining a home construction loan can often be a complex and tedious process. In previous days, house builders had access to sufficient capital that allowed them to complete the project without asking for capital from the buyer. Now, the responsibility of obtaining a home construction loan has transferred to the buyer so that there are enough funds to complete the project from start to finish.

In your quest for a home construction loan, it is important that you have a sound banking history. Since you do not really have any collateral to offer the lender, they will often enforce strict timeline guidelines for your project to ensure that the repayment process occurs in a timely manner. Likewise, your lender will request a project timeline, detailed construction plans, and a detailed budget before granting you the home construction loan. These loans typically have a lifespan of one year with flexible variables that change with the prime rate. You can expect the rates of your home construction loan to be more expensive than permanent mortgage loans due to their complexity in nature.

Once your home construction loan is approved, the borrower will be put on a bank-draw, allowing the lender to follow each stage of the construction project. During this time, you will likely only be required to make interest payments. However, it is important to note that someone will be sent to check on the progress of the project, especially if you are requesting additional funds.

Whether you are looking to obtain a loan for an apartment or house, our experienced professionals can help you secure the loan you have been looking for all this time. Our lending and mortgage experts will go above and beyond to ensure this process is as smooth as possible for you and that no mistakes are made. For all of your lending needs, contact Avis Lending with locations in Irvine, California and Lahaina, Hawaii.

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