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When building your own home, many things go into
the process before you even can pour the foundation. First you should
begin working with a lender who is approved to write construction
loans. Discuss your financial standings early on so you don’t
waste time or money along the way or build a home you cannot afford.
Once you know what is affordable, you can have an
architect draw professional plans and have general contractors bid
the job. Make sure that you discuss the quality of construction,
any changes, and how flexible the contractors are on making those
changes. Once you understand each other, make sure you have put
all discussion items in writing.
Now that you have a general contractor, he or she
will begin working with the lender to provide necessary documentation
for the construction loan. Once you close with your lender on the
construction loan, the general contractor will begin to build.
Construction Only Mortgage:
Usually a short-term loan, interest is paid only on the amount drawn
out each month. The loan is due at the end of the construction period,
so it will have to be replaced by an end loan
Time:
Most construction loans take 8 to 12 months to complete. If a project
takes longer than originally expected, extensions are granted on
a month-to-month basis. Sometimes, there are fees associated with
these extensions and it is important to understand the terms, especially
in winter due to weather delays.
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