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, it will be very important that you have good understanding of what the loan is about just before you jump to the bandwagon and apply to get one.
So what’s with a construction loan offered by 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 the lenders are going to secure first a mortgage over real estate property that you will be financing; then they are going to plan a periodic payment to the builder or house developer at periodic interval. This is while the work is still in progress.
Construction loan center has different requirements and credit policies that they apply when processing the loan application. But don’t be so confused immediately since most are the same. In the next line is a list of credit providers or lenders funding 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. Before the construction commence and if you’ve borrowed to buy vacant land already to which you’re building your new house, the first loan disbursement that’s made by the construction loan center will pay off the vacant land first.
Number 3. The providers are going to breakdown the amount of loan into progress payment drawdown amounts. All this would be made to the builder at the completion of every stage of construction.
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. This will be done at every construction stage from buying of vacant land, laying of flooring, installation of roofing including the frames, lock up stage and lastly, the completion stage.