Low on Funds for House Construction? This Loan can Help
Constructing your dream home in Ogden is not exactly cheap. If you’re in need of financing, consider taking out a construction loan.
What Exactly is a Construction Loan?
Construction loans are normally short-term loans used for paying expenses related to constructing your home. Lenders offer it in a set term, usually one year. After completing the construction process, you’ll need to take out a new loan, called an “end loan,” to repay the construction loan.
When your application gets approval, your lender will set you up with the necessary funds. Wasatch Peaks Credit Union mentions a simplified process for the application so you can start house construction soon. However, funding won’t be given to you all at once.
Instead, there will be a draw schedule that will follow the construction stages of your home. When you request for funds, your lender will have someone check the progress of your home’s construction to see if you’re on schedule.
Lenders assign the draws or scheduled intervals to determine when you can obtain funds throughout the construction process. There are several draws. To illustrate, you get 10% of your loan upon closing the deal and another 10% after clearing the lot and setting the foundation in place.
You get the succeeding funds once the frame of your house is in place and after sealing up the house. You and your lender will discuss the amount you get per draw, as well as the schedule.
Normally, the initial draw comes from the down payment of your construction loan in Ogden, so you shoulder the risk. Lenders do a thorough inspection at every stage in the construction process before releasing the funds for the particular stage. This will make certain that you spend the funds properly and on the right things—and that you follow the schedule.
Building your dream home can be fun and rewarding, but it may also be costly. Assess your financial situation and see if construction loans can help.