Mortgage Lending Library
Construction loans can help you build a property or home on a land lot you have purchased. You can combine construction loans with land loans and even combine them after your building is complete to enjoy one simple payment each month. Construction loans depend on a story. This means that you have to have a good plan (or “story”) to tell the lender in order to convince the lender that you make a good loan risk. Before applying for construction loans, researching builders, contractors, plans, building costs, and all related issues is a must. The more details and research you can show, the more likely you are to get good rates on construction loans. It is also important to realize that construction loans are different in structure than home equity loans, new home loans, and most other types of real estate financing. Generally, construction loans are paid out in increments, as building progresses. You may receive an agreed-upon amount from construction loans after clearing the land, after placing the framing, and after putting on the roof, for example. Since steady work progress is important in construction loans, it is important to make sure that building will proceed at a good rate, or you will run out of funding at various stages of your project. Most construction loans are variable rate. The actual rates and amount you can get from construction loans will depend on your situation. If you already own the land you will be building on, that plot can be used as equity and can help you get better deals with construction loans. If you have a good credit history and a very reliable team of builders helping you that may also convince lenders to offer you better terms on construction loans. Generally, construction loans are meant to be short-term loans, and this is one important way they differ from a new home loan. Once your building is completed and a certificate of occupancy is issued, it may be a good idea to covert the loan into a more traditional mortgage. This sort of mortgage refinancing is very easy, since you will usually not have to fill out an additional application or pay additional closing on the loan if you have agreed with the lender ahead of time to take part in this type of construction-to-permanent financing option.
A home improvement loan can help you afford renovations, restructuring, and necessary repairs on your home. With a home improvement loan, you can improve the value of your home, and create the living space that suits you best. In many ways, a home improvement loan can actually save you money. For example, by making your home energy efficient you can save money in fuel costs. By creating a dream home, you can avoid the expense of moving. Finally, by improving the value of your home, you may improve your home value and so have more equity that you can use to negotiate for better loan rates.