Savvy Financing

One of the most important factors in successfully building your new home is obtaining the construction loan. Here are a few things to keep in mind:

• The interest on a construction loan will typically be a few points higher than on a conventional mortgage. This is to encourage timely completion of the project and a rollover into a long-term mortgage.
• When you apply for your construction loan, apply for more than you will need. Running out of money before the project is complete can be disastrous.
• Don't make expensive changes after construction begins. An ounce of planning can save you cash and stress.
• Make sure your financial package is complete before visiting the lender. Complete all required forms and provide as much information as you can, including: cross-sections of the home, specification of details and blowups of key areas. This will also help the builders give you accurate estimates of building costs.
• The bank pays out your construction loan in four to ten draws, after proof is shown that the specified phase is complete. Draw schedules are normally back-ended, requiring you to go into the project with start-up cash of your own.
• If possible, apply for a Permanent-to-Construction Loan (or convertible loan). This eliminates additional closing costs by putting both the construction loan and long-term mortgage in one loan. Shop carefully for the best rates.

To learn more about financing, check out, take a look at the excellent, "The Complete Guide to Contracting Your Home" by Dave McGuerty and Kent Lester.

Your Lindal dealer has experience in guiding new homebuilders through the often complex process of obtaining construction and bridge loans, and avoiding excessive fees and other common financing pitfalls.