The best construction loan lenders are those with experience. This is primarily because construction loans are more complex than your average mortgage loan. Many national banks have developed construction loan programs, but as always, you must be sure to compare the rates of numerous banks in your area. Before signing a contract towards the completion of your home, pay close attention to the bank’s lock-in policies and interest rates. Most of these loans are set at the prime rate or a general short-term rate.
In providing a construction loan of any kind, lenders want an explanation of the construction plan. Before they give you money to build on your property, they want to know that you will still have the capital to pay them back. Because construction loans do not fall under the standard guidelines of the Fannie Mae and Freddie Mac corporations, most construction loan lenders have a developed a separate system of interest-only payments during the construction process that are then due at completion.
The construction process is officially completed when the home receives its certificate of occupancy. Many borrowers use a construction-to-permanent financing program that allows them to transfer their construction loan directly into a mortgage when the home has its certificate. Such programs allow the homeowner to avoid the hassle of refinancing. There are many different types of construction loans out there and it is important to be aware of all your options. For example, often the property itself can be used as equity on the construction loan. For more financial tips in homeownership, there are a wide variety of accessible websites including http://www.1refinanceloan.com and http://www.1californialoan.com.
