When deciding to take the next step in your life and buy a home, you will have several decisions to make. Many times people find that building their new home gives them more freedom to make the home exactly what they want it to be. Obtaining the finances to build a home is a much different process than getting funds to buy an existing home. If you already have the property you wish to build your home on, or even if you don’t; having the help of a broker will make the process much easier. Getting help from a broker during this process, such as the ones at OE Mortgage can help you through the process of obtaining a construction loan and being on your way to having your dream home.
What is a Construction Loan?
When someone decides to build a home, either they or the contractor that will be building the home will need financing. Unless you already have a mortgage on another home, obtaining a construction loan can be difficult to get. This is because you currently have nothing as collateral which will keep the lender at ease; should something go wrong. Ultimately, the lender wants to be positive that they will be paid, so they will want extra assurance. With a construction loan, the lender will provide an initial sum of money that allows the construction to begin. Before any other funds will be disbursed, the lender will have someone survey the progress and report whether the building is on schedule. The money will be disbursed throughout the process until it is completed. Once the project is completed, the construction loan will convert to a long term mortgage that is like any other mortgage.
What a Broker Can Do
Because the process of getting a construction loan is so much more difficult, having the help of a broker can make the process easier and give you the best outcome. Brokers have contacts with various lenders and are able to negotiate interest rates for their clients. They are familiar with the whole process and are able to inform you of what to expect every step of the way. They can even hire all of the needed contractors to complete the project and they can obtain the building permits needed to get the work done. Brokers generally do not charge a fee for their services as they receive loans from the lenders at wholesale rates and then provide them to their client at what they will receive from the lender without a broker. The added benefit is that they will have the assistance of someone who is knowledgeable about the process and what to expect.
Building a new home is an exciting process and the road to your dream home can be long but rewarding. Making sure that you have trustworthy contractors and that the building process continues on schedule can be much easier with a broker on your side.