If you were planning on building your dream home in 2010 it was nearly impossible. Just 3 years ago there were 20 plus large nationwide banks that offered residential construction loans. In 2010 there are less than a handful of large nationwide lenders that offer residential construction loans. So where did all the lenders go, well they either went out of business, bankruptsy or the banks simply stopped offering residential construction loans all together. So what you do if you want to build your dream home? You litterally have to start hunting down banks either nationally via the internet or locally door to door, bank to bank.
You can do a google, yahoo or bing search and type in the words construction loan, or construction loans to see who can help nationally and or locally. The best construction loan specialists are usually at the top of the search engines nationwide in most Google searches and also at the top for keywords California construction loans or whatever state you live in. The best companies and loan officers are the construction loan specialists. It is best not to look for “jacks of all trades” for your construction loan needs. Search for banks or companies that only offer residential construction loans for families to build their dream homes and that is the type of company or service you should be looking for.
So what do you need in 2010 and most likly in 2011 is excellent credit with credit scores in the 700’s or higher, full documentation, tax returns, and 20 to 25 percent down payment or equity. The equity can be in the form of paid land, down payment on land, pre-paids such as blueprints, grading etc. When you apply for the loan you will need an approved set of house plans by the city, a cost breakdown from your builder as well as a contract spelling out the terms. These items are required by the lender and so if you do not own land yet you will need to buy the land first, get your ducks in a row then apply for the loan. There are lenders that povide land loans but the best way is to obtain owner land financing if possible because of less loan costs and interest rates. You can also look for owner builder construction loans but the terms are usually not as good as the hire a builder lenders.
To see if you qualify it is best to fill out a loan application first and do a simple pre-qualification with either a lender or broker that is providing construction loans. The pre-qualification will provide you with a good faith estimate that shows the interest rate and fees of the loan. Most companies can provide that service as well as national lenders for all your construction loan needs. If you find a source on your own it’s very important to find the construction lending specialists. The local banks in your area are a great source especially if you have a banking relationship. Do not rely on asking the bank tellers if they offer construction loans because most of the time they do not know. Always ask to speak to a loan officer within the bank and if the bank is not currently offering construction loans ask if they know a source in your area.
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