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Construction Loans
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If experts are to be believed bad credit home construction loans are specifically designed loans for people whose credit history has been damaged. As a matter of fact these loans allow people with poor financial backgrounds the opportunity to build a dream house.
Theoretically speaking before obtaining a bad credit home construction loans, the first thing you should consider is whether to approach a mortgage fund company or a bank. It is worth mentioning in this regard that many mortgage companies are able to provide a variety of bad credit home construction loans to suit your needs. Banks, on the other side of the coin, are hesitant to entertain people with poor credit history. In addition several kinds of rate schedules, additional fees, and conditions are associated with these loans. In simple terms the rates vary on the basis of mortgage sales, seasonal trends, and the reputations of the lenders. Point to be noted in this regard is that the down payments on bad credit home loans usually range from 3% to 5%. Furthermore it is worthwhile remembering that some money lenders do provide funding with a down payment of below five percent. On the other hand sub-prime lenders specialize in lending high-risk loans, especially loans to people with bad credit. Fact remained to cover the risk, these lenders charge a higher rate of interest. Believe it or not there are a good number of bad credit home construction loans programs for people with credit problems. Theoretically speaking these are quick loans to obtain and are valuable solutions for temporary financial problems. It is worth mentioning in this regard that lending companies focus on factors such as loan-to-value ratio, monthly income, and debt-to-income ratio before granting the loan. Always remember that you can negotiate for more favorable terms. According to experts an ideal solution to finding a suitable lender is to shop online, which will reveal the best lending rates for your particular situation. In simple terms when you are ready to build your first home or that dream home that you have been wanting for so long you will probably wind up needing help with the financial part of the building process. More often than not the funding for your new home is available through new home construction loans. Fact remained that both owners and builders can use construction loans, although some lenders are a bit hesitant about lending to first time homebuilders. There is no hiding the fact that construction loans are a homebuilders dream funding. If experts are to be believed this loan may or may not include the cost of the land used to build your home on. In other word these loans set up a line of credit that will pay suppliers and sub contractors as the building process goes along. There is no denying that this will make both workers happy because they do not have to wait until the completion of the home to be paid for their services. Believe it or not a new home construction loan will be set up in monthly stages or into stages where specific portions of the building process are finished. Point to be noted in this regard is that during these stages, a construction draw will be organized that will state the amount of funds that were used during that specific time period. Fact remained that the construction draw is then given to the lender so that payment to the building workers can be executed. Theoretically speaking a residential mortgage is required before you apply for a construction loan and must be presented to the lender you choose before the building process begins. According to experts a stated income construction loans is a loan in which the funding
will be provided to help you build the home of your dreams. Whats more this type of loan does not require any verification of your income. On the other side of the coin with a stated income construction loan you are either having trouble verifying your income or you choose to not submit that information to the lender. Always remember that either scenario is acceptable with this type of construction loan. As a matter of fact an individual who is self-employed is a great example of a borrower of a stated income construction loan. In an ideal scenario these loans work just like other construction loans and your assets and employment will both be verified. On the other side of the coin the interest rate of these loans may be higher than that of other new home construction loans because of the risk involved with borrowers whose income is not verified. It is worthwhile remembering that the down payment for such a loan may also be higher than that of a traditional construction loan. In theory the advantage of a stated income loan, besides the no verification of income is that these loans are approved at a faster rate than other new home construction loans. Always remember that there are two types of construction loans. First one is the all in one loan, which is automatically changed to a mortgage upon completion of the home. On the other side of the coin is the construction only loan, which is due when the building is done, and then the loan must be paid off or replaced by a mortgage. Point to be noted in this regard is that lenders will pay funds for the building of your home in several draws. This clearly emphasizes the point that at different times during the building process a plan is drawn up that will state how much funding was used during that particular stage. Next it is sent to the lender and the funding is paid. According to experts examples of the stages would be after pouring the foundation or framing the house. In simple terms a stated income construction loan is a loan that does not require verification of your income. Furthermore it is worth noting that a person who cannot verify his or her income or someone who chooses not to share this information will benefit when applying for a stated income construction loan. Other Articles |
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