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New Single Family Home Construction Loans

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New single family home construction loans are different than typical home mortgage loans. While they are more complex for the loan officer, they are designed to meet your needs as someone building a new single family home. There are many different types of new single family home construction loans, and all loans can be tailored to meet the needs of each individual and their situation. New home construction loans are sometimes called story loans because the loan officer at the lender listens to your story, and determines the best way to write the loan based on your specific situation. They select from an array of possible loan styles and then adapt the one that seems best for you. Before we to far into the details you might also want to check out these two articles Interest Rate for Home Construction Loan and Construction Loan Requirements.

All right let’s get into the details. With so many new single family home construction loans choices let me walk you through them one by one.

New Single Family Home Construction Loans Choices

New Single Family Home Construction Loans Choice One: Construction Loan to Permanent Loan
One of the most advantageous choices is the new construction to permanent loan. With this loan you qualify only once, and set up the details of both the construction and permanent loan at the same time. One of the best aspects is that you can lock in your mortgage interest rate immediately, to take advantage of the current rate. The loan allows up to 12 months to complete construction. During the construction phase you will only pay for interest on the money which has been disbursed. Only after construction is complete do you owe actual house payments. Until then you only pay for interest on funds disbursed.

New Single Family Home Construction Loans Choice Two: Construction Loans
Construction loans are short term, interest only loans which have to be replaced by a regular mortgage loan upon completion of construction. The main problem is that they leave a lot unresolved, and do not lock in the interest rate until after construction.

New Single Family Home Construction Loans Choice Three: Construction Land Loans
These loans include financing for the land, landscaping, construction, architects fees, engineer’s fees, permit fees, finishing touches including appliances floor coverings. One of the advantages of this loan is that you owe absolutely nothing until the homes is complete. Interest on disbursed money is accrued until completion of the project. This is important for people who are already making payments on another home.

New Single Family Home Construction Loans Choice Four: FHA Construction Loans
FHA loans can be used for construction, as well as standard mortgages. They feature better interest rates, and many other advantages including low down payments allowed, and less stringent credit requirements.

New Single Family Home Construction Loans Choice Five: VA Construction Loans
Though you may have trouble finding a lending institution to handle them, these loans have a lot of advantages including no requirement for a down payment and offer access to great lending rates.

New Single Family Home Construction Loans Choice Six: Owner Builder Construction Loans
These are loans for people who intend to build their own home or investment, or rental property. These kinds of loans can be very difficult to get, but a few companies handle them. They may finance conventional, kit or log home construction. Most banks prefer by far that professional builders build the home which they hold as collateral on the loan, however if you find a loan company feels you are handy enough to build your own home, you may qualify for one of these loans.

New Single Family Home Construction Loans Choice Seven: Home Builder Mortgages
Some home builders have their own mortgage division or partnerships with mortgage companies that will finance your new home. These mortgages are usually standard traditional mortgages and can often times can be a good option.

At this time it is a really good idea to get a loan that combines the construction loan and the mortgage loan, so that you can lock in your great interest rate, and get a commitment from the bank to handle the mortgage. The new single family home construction loans which allow you to combine the construction loan and the mortgage loan in one pre construction closing are most advantageous.

Let’s recap new single family home construction loans …

New Single Family Home Construction Loans Overview:

1. New single family home construction loans, in most cases, are different than typical home mortgage loans.
2. Construction loan to permanent loan is often a good choice for a single family home construction loan. With this loan you qualify only once, and set up the details of both the construction and permanent loan at the same time.
3. Straight up construction loans are short term, interest only loans which have to be replaced by a regular mortgage loan upon completion of construction. The main problem is that they leave a lot unresolved, and do not lock in the interest rate until after construction.
4. Construction land loans include financing for the land, landscaping, construction, architects fees, engineer’s fees, permit fees, finishing touches including appliances floor coverings.
5. FHA construction loans can be used for construction, as well as standard mortgages.
6. VA construction loans are hard to find. These loans have a lot of advantages including no requirement for a down payment and offer access to great lending rates.
7. Owner builder construction loans are for people who intend to build their own home. This type of loans can be very difficult to get.
8. Some home builders have their own mortgage division or partnerships with mortgage companies that will finance your new home.
9. Get as educated as you can on new single family home construction loans and the overall home building process. Download the free New Home Steps Guide above and become smart on home building from start to finish.

Let me know if you have any questions. I hope you this article on new single family home construction loans was useful.

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