Buying a land and building a new home could be an exhilarating experience and if you intend to urge funding, you would want to know your choices associated with them. There are different land loans and construction loans available and before taking the plunge, you must be well aware of what you’re getting into.
What kind of funding or loan is perfect for you? Even though it might seem to be obvious, but this question is almost always misunderstood by the borrower. It’s important to understand that these loans have their own unique terms and conditions and the lending depends on many factors, like your personal financial standing, type of property you are purchasing, how long will you take to complete the process et all. We will try to get you a little well verses with Lot and Land Loans and Home Construction Loans.
Lot and Land Loans
This loan, like the name suggests, is when you want to buy the perfect home site. You might not be ready yet, to start getting the house constructed but want to keep the land, you may want to look into this option. This loan lets you secure your home site and then start looking for the right home builders. From a borrower’s point of view, this is less favourable than money mortgage for a home. You may find yourself paying higher interest with higher down payments. Lenders have different policies for different situations. Be smart and read between the lines.
New Home Construction Loans
When you have a home builder in place with the home site, then construction loan, is what will work for you. This type of loan may fund you for custom or semi-custom home construction. If you are purchasing a completed home for sale, then go for money mortgage to buy the new home and land.
These are mostly short term loans and require a lot of paperwork. Be ready for that.
Talk to your bank. Understand their policies and make them understand what is it that you’re looking for.