A construction mortgage is a mortgage where funds are released at stages during the time of house is being constructed. It is not easy for the lenders to get their money back if the construction doesn’t go as per PLAN submitted to the Bank. The Bank generally expects from clients to use their own money to complete the every construction stage. An appraisal by certified appraiser is required for each draw in which an inspection report will detail the percentage of completion.
- First draw is to use for purchase of Land.
- Second draw normally at 35% completion of work up to windows, doors and roofing.
- Third draw normally at 65% completion of work up to fixing of dry walls.
- Fourth draw normally at 97% completion of the construction.
There are two options for Construction Mortgage; you have to sign an arrangement with the registered builder to build your house. The builder will use your construction mortgage financing to build your house OR You are your own contractor and hire the sub-contractor to do the construction for you.
If you have good family income and your credit is good as per banks requirement, you are able to satisfy their lending criteria, the best option is Bank for getting Construction Mortgage. You might be pay higher interest during the construction time period but once the construction is complete you can choose the fixed or variable mortgage rates.
If for some reason you are not able to get approval by the traditional banks or local Credit Unions then Private lenders will be a second option. The private lender may charge a higher interest rate. They will lend money when the others say that they are not comfortable to help you in the prevailing situation. After getting completion of house the client have an option to move any Bank/Lender for the BEST INTEREST.
Divine Mortgage Group will HELP you at step by step for excellent services.
