Ever Growing Popularity of Construction Loan Center
Construction loan center is actually gaining popularity and attention amongst people. If you are planning to build the house of your dream particularly when you are in need of financial support, then it is going to be smart to know more about this. On the other hand, prior to joining the bandwagon and get a loan, it is vitally important that you have thorough understanding of the loan.
With this in mind, what is a construction loan that you can get from a construction loan center? Well, it is basically a short term, interim loan used to finance the construction cost of your dream house. The credit providers or lenders are going to secure mortgage over real estate property that you are financing and also, they are going to create periodic payments to the builder or the house developer at periodic interval. All of this while the work is in progress.
The construction loan center has various requirements and credit policies that they are adopting when processing the loan application. On the other hand, majority of them are actually the same. Following is a quick list of credit providers or lenders fund construction loans.
Number 1. These entities are going to fund the amount of the loan needed by the client in order to cover for the entire cost of buying the vacant land and the cost of building the property.
Number 2. Just before the beginning of the construction and if it happened that you have borrowed the vacant land already where you will be building your new house, the first loan disbursement that has been made by the construction loan center will pay off the vacant land first.
Number 3. Providers would then breakdown the loan amount into progress payment drawdown amount. At the completion of every stage of construction, this would be made to the builder.
While it is true that the construction loan is virtually the same with mortgage as we know, there are of course handful of differences they have like the construction of new house should commence within 1 year of loan settlement, the construction of the house has to be done within the same year of first progress down payment, usually a short term solution with a max of 12 months, the interest is calculated against the portion of the money borrowed and been drawn down and the borrowers are expected to pay the interest during the period of construction.
The construction loan center are going to arrange everything to prepare valuations before progressing payments to the builder. And you must know that this will be performed from buying of vacant land, laying of flooring, installation of roofing including the frames, lock up stage and lastly, the completion stage, basically at every construction stage.