How to apply for a home building loan
There are a lot of different things that you have to take into consideration when you are going to build a home. You will want to first decide if you are going to be your own contractor or if you are going to have a contractor build it for you. Then you will want to start looking at house plans. You will also want to pre qualify for a house loan so that you know how much you can spend on a house. You will want to make sure that you check into some things before you decide on what type of home building loan you want. Here are some tips on how to apply or a home building loan.
The first tip is to compare interest rates. You will need to make sure that when you are comparing interest rates that you pay attention to if the interest rate is a variable interest rate or a fix interest rate. There are some banks and credit unions that advertise low interest rates such as minus .75 below prime but they don't advertise that it is a variable loan so you are not locked in and might end up paying more money then you would if you would have locked in to a fix rate for so many months.
The second tip is to watch out for origination fees. Some banks will advertise that they have origination fees that are only ½ of a percent but then once you go to sign papers they inform you that the only way you get ½ a percent is if you get your final home loan through them as well. If this is the case you will want to make sure that you take a look at what the bank offers as far as their final loan interest rates are. Some banks you will end up paying more by having your long term loan with them then you would of paying the full origination fee. You will want to make sure that you shop around and look into different banks so that you know can compare not only their interest rates but also their origination fees.
The third tip is to pay attention to how many draws you can make a month. You will want to make sure that you can do a couple of draws a month so that you are able to pay your sub-contractors and not get any late charges because your bank won't let you make a draw because you are limited to so many a month. You will also want to make sure to find out what the different processes are to making draws. Some banks might just let you fax in the draw papers and then they mail out the checks while others make you take in the draws and then you have to go pick up the checks and mail them off yourself. You will want to make sure that you pick te one that is going to be the most convenient for you.
The fourth tip is to find out what your different options are as far as home building loans. For example if you work a commission based job you might have to do stated income because your paychecks vary from month to month. You will want to make sure the banks or credit unions that you are looking into will let you apply for a home building loan with a stated income. Other wise you won't want to waste your time with all of the paper work just to find out that you can't qualify because you don't have a steady paycheck.
These are a lot of different things that you will want to take into consideration when you are applying for a home loan. Just make sure that you do your research so that you know what to look for and know what things you will want to pay attention to so that you get the best home building loan for you.
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