|Mortgage Refinance Information|
Construction Loan Basics
It might not be too big of an exaggeration to say that the construction loan is one of the more daunting aspects of building your custom home. Before we started our project, I had nightmares about trying to pay two full mortgages at the same time (our existing mortgage and the construction loan), and I didn't see how it was at all possible. However, the reality ended up much more reasonable than I dared hope.
COLLATERAL: Many ? but not all ? mortgage companies require you to own your land first before you apply for the construction loan. That way, if the borrower defaults, the bank has a way to recoup their investment. Some banks will let you roll in the land purchase with the construction loan, but you may have to pay a premium.
TIMING: Your standard construction loan will be based on the one year plan. It's perfectly reasonable to expect to finish within a year, unless you are building a handcrafted log home. The good news is that you aren't obligated for the full construction loan amount from day one. You only have to pay interest for the amount of money you actually borrow from each draw. So you won't really be carrying the full mortgage until the end of construction, at which point you will roll the construction loan over to a conventional mortgage.
BUDGETING: Before you apply for the construction loan, you must get all your quotes in order. Banks are not happy about increasing the amount of money you ask for. Be sure to account for all the sub-contractors (plumbers, masons, electricians, excavators, landscapers), the well and septic, the windows and roof, the painters, and even the grass seed. Your mortgage representative will expect you to have a handle on all your financial needs (see my article BREAKING DOWN THE BUDGET OF YOUR LOG HOME for more specifics). If some of these expenses will be out of pocket, it wouldn't hurt to include them in your construction loan request anyway, so you have a cost overrun buffer. And get more than one quote if possible, then use the highest quote in the construction loan request. If you go with the lower quoted job, you'll have another buffer in your favor.
Before the mortgage company agrees on the loan, they will require a copy of the floor plan, permits, and survey. Then they will send out an appraiser who will inspect your property and determine whether your project will appraise for the amount of money they are committing to. Luckily, more and more banks are giving log homes a fair appraisal, but it helps to choose a company that specializes in log homes or your market value may come in too low.
DRAWS: When you've itemized your anticipated expenses, you can share this with your mortgage rep., who will then ask you how you would like to break down the disbursements (or "draws" as we commonly know them). This will be your decision (with a little hand-holding). At first, you might want to schedule a couple dozen draws, until you realize that there is a service charge attached to every draw. For instance, every time the bank releases a draw, you have to notify them a few days in advance. The bank sends out an inspector to verify that the promised work was performed. Then they order a Title Search to verify that you haven't had any liens put on your property since the last draw (this costs about $125 each time).
This leads us to the next issue that pertains especially to building a log home. Normally, banks release a draw after the work has been completed. However, log home manufacturers require COD when the logs are delivered (or ideally the day before). Historically this had been a bone of contention between the banks and manufacturers, until certain banks took the lead and set up accounts directly with the log home companies. This expedited the whole process. These direct deposits become draws on your construction loan.
EXAMPLE: In our case, we ordered a total of 11 draws. On settlement of the construction loan, the bank started us with about $38,000 for misc. expenses. We used much of this to bridge the gap between draws (the contractors want to get paid regularly). There was a draw for the Log Kit deposit. There was a draw for our Superior Walls precast foundation (another direct deposit). Another draw paid for the COD log delivery; another draw paid for the window delivery.
Then things got more tricky, because the next draw covered the well and septic, which had to be completed first. Once the log walls were raised another draw came, another when the "weathered-in shell" was complete, and another draw when the mechanicals were installed. The last draw came at the end of the project, but the bank wouldn't release the money until we had stained the house and planted grass seed. They wanted to make sure the house was ready for sale.
With luck, you won't be delayed by weather or on-site errors, which could derail your whole plan. However, if you don't have some extra money set aside, your contractors might quit working until they get paid, knowing full well that you won't get paid until the work is finished. Coffee and donuts help to keep relations smooth, but nothing works like cash.
And remember: if by some miracle you don't use all the money you requested in the construction loan, you can always give the rest back. So don't cut corners. Estimate high, spend less, and you just might have enough left over for that luxury item you always wanted.
About the author: Mercedes Hayes is a Hiawatha Log Home dealer and also a Realtor in New Jersey and Pennsylvania. She designed her own log home which was featured in the 2004 Floor Plan Guide of Log Home Living magazine. You can learn more about log homes by visiting http://www.JerseyLogHomes.com
What to Really Expect for Closing Costs
Closing on a property is a very challenging time for a would-be homeowner. Being informed, either through your mortgage broker, your real estate agent, or through self knowledge is the best thing you can be when going through this procedure.
Home Equity Loans Categories
Fixed Rate Mortgages: These loans have a fixed rate of interest over the entire term for which the loan has been disbursed. The term for these mortgages is typically between 10 to 30 years. The monthly interest payment on these loans is fixed and hence there exists a certainty about the repayment of the debt over the entire term of the debt. Another advantage of fixed rate mortgages is that the initial down payment required is very low, generally around 5% of the loan amount to be disbursed.
Although any loan used for buying real estate is strictly called a purchase money mortgage, the term is often employed for seller financing, those transactions in which you "take back" a mortgage as part of the purchase price. These arrangements are suitable, of course, only when you do not need your proceeds immediately toward the purchase of another home.
What is a Capped Mortgage?
A capped mortgage is a variable rate mortgage with a capped limit beyond which the rate paid will not exceed.
A Guide to Quick Homeowner Loans
The search for quick homeowner loans can seem futile at first, especially if you don't know exactly what it is that you're looking for.
Kingsland Georgia Mortgage Company Information For Homebuyers Transferring to Kings Bay
If you are transferring to the Kings Bay Georgia Naval Submarine base, more than likely you will need a lender to buy a home.
Kingsland Saint Marys & Kings Bay Real Estate - VA Mortgage Information For Home Buyers
A VA guaranteed mortgage is the usually the best way for active or inactive veterans to purchase a home. The VA mortgage allows the buyer to purchase a home with absolutley no out of pocket expenses!
Find the Best Mortgage Company
If you do not wish to commit to living in one place for at least a few years, then owning a house is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner. But if you think you are ready, you probably need to find a mortgage loan. Finding a mortgage companies or lenders can be an arduous task. This is a serious decision and you should be ready to invest some time to research mortgage loan options and understand the mortgage loan process. There are many lenders and you should contact several potential lenders to search the best mortgage companies and lenders.
Mortgage Prepayment Penalties - Just Say No
One of the most common terms found in a new home loan is a prepayment penalty. This type of penalty says that if the borrower pays off the loan early, commonly during the first five years of the loan, then the borrower will be responsible for paying an additional amount of money, typically about six months interest on 80% of the mortgage balance. Sub-prime market loans will typically carry prepayment penalties more than standard mortgage loans.
First Time Buyer Mortgages ? Transforming Homeless into Property Owners
Having just settled in life, you are finding the rentals putting too much of a burden on your finances. Nevertheless, you continue the payments thinking that purchasing a home would be practically impossible. There are many expenses that one has to necessarily make in order to just make a bare subsistence. Though the list differs with each individual as each has a subjective concept of the necessities, it is difficult to accumulate enough savings to pay for a house.
Stop Foreclosure - 7 Tips to Save Your Home
Faced with the threat of a foreclosure on their home, with all the weight of the mortgage industry and its army of attorneys against them, the average homeowner might feel like David facing Goliath.
Home or Investment Property Equity: Be Sure the Bank Gives You All that You Deserve
Home equity is your own personal money machine. If you want financial freedom, a home equity loan is probably the best way to achieve it. You can pay down credit cards, pay off cars, both at high interest rates, or you can actually use your home equity to invest and build the money into a fortune. The biggest problem people run into with home equity is that they don't have enough of it. Sometimes, the problem may be with your bank and not with your equity.
California Bad Credit Mortgage
California is a beautiful place to live There is no doubt about that. But, to live in California you must pay the price, which is sky high real estate prices. Renting, as opposed to buying in California, can save a little bit of money. However, renting has the disadvantage of not building any equity. As home prices in California continue to rise, you may want to be a homeowner and take advantage of the home appreciation factor. If you're going to be paying a lot of money to live in California anyway, you might as well be making some money on top of it too, right?
Poor Credit? Get a Sub-Prime Mortgage Now, and Refinance to a Conventional Mortgage Later
There are great mortgage loans for people with poor credit, and yes, you can still save thousands of dollars. In order to receive preferential treatment for mortgage professionals, you'll need a credit score of 680 or better (this is considered A credit). If you have a score that is less than 600, you'll fall into a sub-prime loan category. Now, you'll need to get creative, in order to get your mortgage and not lose a fortune.
Adverse Credit Mortgage Loan - Persistence is the Key to Getting Approved
People with bad credit that are looking to get a home mortgage loan or to refinance their existing home mortgage loan, know how difficult of a job it can be to try and get approved. Adverse credit history can mean a little more legwork to get an approval for a mortgage loan, and especially to get a decent interest rate.
Mortgage Reduction Solutions
USA ECONOMIC CONDITIONS
How easy is it to get a Commercial Mortgage in the UK?
As is the case when applying for any mortgage, be it a residential or a commercial mortgage, the better your credit and the better the collateral, the easier the process becomes. But that doesn't mean that if your credit is less than perfect, or you want to purchase commercial property in a less then desirable part of the city, that you are automatically locked out of getting the money you need. It just means that you need a "friend" in the business.
Home Equity Loans Online
If you are in the market for a home equity loan, consider an online lender. Home equity loans online are fast and easy. You could be approved in just minutes when you apply online for a home equity loan. The online lending industry is highly competitive. Online lenders are offering home equity loans with the lowest interest rates in years. When you apply for a home equity loan online, you will be assured of professional service, prompt attention to your questions, and expert advice throughout the entire loan process.
Refinancing Online - Get The Best Refinance Home Loan You Can Get
When going to refinance or get a mortgage loan quote, the internet can be a useful tool to shop around for the best interest rate. The reason the internet is a good place to start applying, is because most mortgage applications online do not typically pull your credit with the first application. Most of the time, the application will ask you to describe your credit. Once you have received an initial offer, then, the mortgage loan consultant who contacts you will ask you if they can pull your credit.
Home Equity Loan ? When Does Refinancing Make Sense?
For the last two years, interest rates have been much lower than anytime during the last thirty years. This has resulted in an unprecedented boom in real estate sales, home refinancing and home equity lending, as borrowers try to take advantage of these rates for the long term. But refinancing or even borrowing against your home's equity may not make sense for everyone. When is it a good idea to refinance your home? When is it not advisable?
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