Bonita Springs Construction Loan
Bonita Springs Construction Loan
When you are considering home ownership, you have a couple of options available to you. First, you can elect to purchase an existing home that has been owned by someone else, you can purchase a newly-built home or you can build your own home. When you are considering building your own home, you will need to understand how a Bonita Springs construction loan works.
Not your typical mortgage
Construction loans work more like a line of credit than a mortgage. When you apply for a construction loan, it is important to understand the loan is granted based on a “maximum amount” and is subject to being refinanced into a standard mortgage.
The Application process
When applying for a construction loan, you will need a different set of documents than are required with a standard mortgage. Since the lender has nothing to base an appraisal on, instead of a standard appraisal you will need the following:
- Purchase and sale of land – a purchase and sale agreement for the land where your home is to be built must be provided to your construction loan lender;
- Proof of equity – remember, a construction loan will not cover 100 percent of your construction costs and land purchase. You will have to prove that you either own the land or you have placed a considerable down-payment on the land;
- Blueprints and schedule – your builder will have to provide the construction loan lender with blueprints for the property. Based on these blueprints, your property value will be assessed as well. The builder must also provide a construction schedule that provides the lender with a schedule of funds needed to complete the construction;
- Licenses and insurance – builders will be required to provide copies of their license as well as a copy of their insurance policies.
In most cases, your construction loan lender will require you to be approved for the “end” financing portion of your loan. This means you will still be required to provide the same documents required for a typical mortgage in addition to the specialized documents required for a construction loan.
Understanding construction loan payments
When you take out a construction loan, you may be required to make interest payments on the balances as the builder takes draws during the constructions phase. These payments continue until such time as the loan is rolled-over to a permanent loan. Oftentimes, a lender will provide a loan option called “construction to permanent” which is a two-stage loan. The first stage of the loan – the construction phase – is paid out to the builder as they complete portions of the construction. The second phase – the permanent stage – buys out the construction loan and converts it to a standard mortgage.
Construction loan financing is significantly different than a straight mortgage loan. If you need information about Bonita Springs construction loans, contact Core Mortgage Financial today. We will work with you to find the right construction loan with permanent financing to help you build the home of your dreams.
Our licensed loan originators are ready to customize your loan according to your current needs.
We are considered experts at Bonita construction loans, call today at 239-431-5889 !
Contact us today using our online form to inquire about a construction loan.