Ever Growing Popularity of Construction Loan Center
Today, there are more and more people who are beginning to know about construction loan center. 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.
So what is a construction loan offered by 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 will be securing a mortgage over real estate property that you’re financing and they’ll be creating periodic payments to your builder or house developer at periodic interval. And everything is happening while the work is in progress.
Keep in mind that construction loan center follows different requirements and credit policies follow different set of credit policies and requirements when processing loan application. Majority of them on the other hand are basically the same. By reading the next paragraphs, you’re going to know about how credit providers or lenders fund the construction loan.
Number 1. To be able to cover for the cost of buying vacant land and building the property at the same time, these said entities are going to fund the amount of loan that the client needs.
Number 2. Prior to the start of construction and if you have borrowed money to buy the vacant land to which you will be building your new house, the first loan disbursement that is 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. This will be made to the builder at completion of every stage of construction.
While construction loan is nearly the same with the traditional mortgage that you know, it has a number of differences similar to the fact that the interest is calculated against the portion of the money borrowed and been drawn down, it is usually a short term solution with a max of 12 months, the construction of the house has to be done within the same year of first progress down payment, the construction of new house should commence within 1 year of loan settlement 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.