Everyone wants to buy their own home, but the ultimate goal is to build your dream home. There are so many wonderful contractors out there that can build a wonderful dream home for you. However, many people get a little bit intimidated by the process of building a home. If you have your affairs in order before you start the process you will be in much better shape. When it comes to building new homes, there are a few things that you need to remember. Here are just a two pointers to make building your dream home a little bit less of a struggle:
It seems that in this day and age credit is one of the most important buying tools that you have at your disposal. Your credit score can either really help you or it can hurt you. If you have a good credit score then you are likely to qualify for a good interest rate on your building loan. However, if you do not have the best credit then you may just qualify, but at a high-interest rate. The interest rate that you qualify for on your building loan is very important as these rates tend to be high. You do not want to have the loan out for a couple months just to realize that it is building to much interest. to ensure that you qualify for the very best interest rate, be sure that you work on your credit well in advance of building a home.
A mortgage and a construction loan are two very different things. The first thing that is different is that a construction loan is short term, and should last no longer than a year. Since there is more risk in a construction loan, the interest rates can be much higher, which is why a good credit score is so important. In order to qualify for a construction loan, there will need to be a specific construction plan laid out. The loan will also pay out as progress is made in the home. So, as you complete a portion of your home, the money will become available to start the next portion of the home. This is why the lender may have a representative stop in and ensure that progress is being made in the home. With a construction loan, you should also know that a down payment of at least 20% is normal.