by Tina Ramos | October 18, 2016 10:03 am
Owning a home can be a large step to take in your life. Looking for the right home can sometimes be a long and drawn out process, but if you have some land already in your eyesight, there is an option to have your home built. There are many benefits to having your home built, such as having it built exactly the way you want it. When getting your house built, many will still have to obtain some type of loan that will provide the funds to build. There are two types of loans available for building a home and with the help of the brokers at OE Mortgage, obtaining the funds to build your home can be a much easier process.
If you have decided to have your home built, you will likely need a loan to do so. There are two types of loans available for building a home. The most common form of loan is the progress draw mortgage. With this type of loan, the lender will provide funding at different times during the building process. For lenders, you will need to already own the land the house will be built on, otherwise the initial funding will be used to purchase the land. After that, there are usually three times throughout the building process where funding will be released. One after 35% completion, one at 65% completion, and the last after 100% completion has been reached. Before each set of funds is released, the lender will want an appraiser to value the home to make sure that everything is on schedule. After the home is complete, the loan will most times convert to a completion loan. This is the second type of loan and if the progress draw loan is not used, the completion mortgage is the one to apply for. Much the same as a regular mortgage, the completion loan is only given after the house is completely built. Much like the progress draw loan, an appraiser will have to value the home to make sure that the loan is the right amount for what the home is worth.
Having a Broker
Having a broker for this process can be very beneficial. They will likely be in contact with several lenders which can give you options in regards to who will lend you the money to have your home built. They can help you get into a financial state that is more appealing to lenders before you even apply. A broker will make sure that all paperwork is completed correctly and will allow you to focus on the various aspects of building your home rather than having to worry about the administrative end of the process. Another benefit to having a broker is that you can plan out your payments ahead of time. After deciding on what you will be able to afford, a broker will work with lenders to make sure that you are receiving a loan that you can afford to pay back. No one wants to obtain a loan and build a home that they may later have to give up because they cannot afford it.
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