Home Construction loan

Before constructing a house it is very essential to think about its funding process. Home construction loans help you to bear the building cost of your house. Home loans also ensure that project is completed on time and is within the budget. The bank giving loans ensure that you are working with a reputed builder. It mostly requires a construction package that has to be granted by law. The banks will keep a watch on the construction from the beginning till the end. Unlike normal loans, payments in such cases are made after the completion of certain portion of the construction. Banks can also send officials for inspection and visit to the location so as to see the proceedings of the house.

There are two kinds of loans. One type is automatically converted into a mortgage on the completion of the loan. The next type is construction loan, which becomes due after the building is done. This needs to be paid off or changed into a mortgage debt. Payment will be made in several draws, which will show that how much money was used during the construction period and then it is paid by the borrower.

An income stated construction loan is one which does not require any proof of your income. A self-employed person can avail the benefits of this kind of a loan. The approval in this kind of loan is faster than any other construction loans. Its disadvantage is that the down payment and interest rate can be higher as compared to other loans. While choosing the home construction loan it is advisable to compare the interest rates of the various financial institutions providing such loans. Generally loans with lower interest rates should be chosen but is also safe to go through the various other loan schemes and offers that are provided by the banks.

Comments are closed.