Construction Loans
Construction loans can be complicated, and sometimes take some time. If you plan to break ground by a certain date, you will want to make sure your loan will go through by then so that you can pay for the work.
There are a lot of lenders out there, and each offer similar, yet slightly different options for you. You will want to make sure you find a lender that can give you the options that best fit your needs. In order to do this, you may want to ask your lender the following questions:
Questions For Your Home Loan Lender
1. Will you give me a copy of my appraisal including all documentation? (This is something that are going to have done, as they have to know what the value of your home is before they can lend you money, so ask for a copy. There is no sense in your paying for an appraisal as well, so get a copy of the appraisal and all documention.)
2. Will you give me an amortization schedule and allow prepayment of principal without penalty. (You may or may not live in the house forever, so you will want to know what will happen to your loan if you should choose to sell the home and pay off the loan early.)
3. How soon after I complete the loan application will you give me a loan commitment? (This needs to fit your specific timetable.)
4. Will there be any contingencies on the loan approval? (You will want to plan for all scenarios, so find out what the possible contingencies are and prepare for them.)
5. Will you keep my loan in your portfolio, or will you sell it in the secondary mortgage market? (Basically, are you going to make your payments to them, or someone else?)
6. If the loan is sold, to whom?
7. Will the interest rate and loan terms be locked in at the time of application, loan approval, or loan funding? (Rates change, so this is important to know as they could go up significantly between when you apply and when you actually get funded.)
8. Is any fee charged for the lock-in? (Shop around, you can find a lender that won't charge you any fees for locking in a rate.)
9. For how many days does the lock-in apply? (Make sure your loan can be approved and funded within that time period, and find out what happens if it is not funded in time.)
10. How long does the loan approval take after the application is completed? (A week? Five weeks? You need to know when you can start building.)
11. What fees will I be charged? (Different lenders have different fees, find out what they are, and which fees you can avoid, and you will save significant amounts of money.)
12. Are any referral, commission, or other fees being paid? (You want to avoid as many fees as possible, so ask for them to be waived.)
13. How fast can the loan be closed? (The sooner the better!)
14. If you don't get the loan closed within the promised time, will you waive the loan fee? (This should be a definite YES!)
15. How long have you been in the mortgage business? (This will give you an idea of how reliable they are, and how well they stick to what they say.)
16. Are you licensed? (You want to work with a licensed lender.)
17. How long have you worked for this lender? (Your loan officer should know what they are doing and help you get the best deal you can.)
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Tags: construction-loan home-loan mortgage building home
