How does a constructiong loan on a house work?

I am looking at buidling a new house and I just feel like I'm clueless when it come to getting a construction loan. What does the loan cover, do I take the money from the loan and purchase all of my supplies such as lighting, doors, carpe, etc. I just need some guidance. I feel like I can build a home cheaper than buying a home. There are just so many questions left unanswered. Please help!!!

How does a constructiong loan on a house work?

1. It is highly unlikely you can build a house for less than you can buy one from a developer/builder. Even if you already own the land, a contract builder can usualyy do it for less %26amp; certainly faster.

2. Banks who make individual construction loans will require you own the land %26amp; can get all the permits %26amp; zoning you need. Most will require you have a contract with a contractor. They will then give you a credit line on which you can draw for improvement of the land, purchase of materials %26amp; contruction. They usually require a staged draw schedule in which they will release enough $$ for you to complete the next stage %26amp; will require completion %26amp; inspection before you draw funds to complete the next stage.

3. Most lenders will not deal with owner-builders unless they have a contractor do the work or have a LOT of equity in the land, excellent credit %26amp; some construction experience.

How does a constructiong loan on a house work?

Talk to the loan officer and find out what the loan includes and if there are guidelines written in on how you must spend it. Most loans, regardless of description, once you have been approved are yours to spend the way you see fit unless it is written into the contract with specific spenditure limits and requirements (like say maybe a student loan). What you really need to think about after the loan is getting construction insurance before you start building for protection while it is in construction (which is different from homeowners insurance). It is actually more like a property insurance but does cover other aspects of the construction activities.

How does a constructiong loan on a house work?

this is an %26quot;interim%26quot; loan usually,,,,it pays for all the contstruction costs,,,,then when the builder is paid in full,,,it is converted to a permenant mortgage loan. Check with your lenders in your area.....some don't require this intermediate step....just a straigtht mortgage loan.....but in either event they will require a release of the builder's lien at the closing of the final loan.....ask questions,,,make sure you understand the answers....bottom line is you have a loan/mortgage on your house like everyone else....when the construction is complete

How does a constructiong loan on a house work?

Matt, DoNOT sign any thing b4 u do ur homework. suggest u find a u-build-it site and explore their sites.

doing a owner build house is not the quickest way and if u are not careful it will be the most expensive way to go.

visit the library to start buy some books at bookstore study study . bring in professionals where needed or u'll lose money.

How does a constructiong loan on a house work?

First off I seriously doubt you could build a home cheaper than you could buy an existing home for.

Have you priced building materials lately?

Due to the exploding growth in China everything from concrete to copper has gone through the roof.

You might want to look at both building a house and buying existing.

I think you'll find plenty available for a lot less than actually what it would cost to build one.

Hope this helps.

P.S. EVERYONE I know who has built their own house said they had no idea how much over budget they went. If they had known they would NOT have build the house.

Terry S.

http://www.Welcome2Arizona.com

How does a constructiong loan on a house work?

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How does a constructiong loan on a house work?

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