Getting Started with the Financing of New Construction
Funding New Construction using USDA Loan
Financing Decision Typically 48 hour
Funding New Construction : If you are thinking about the concept of perhaps building your own home, it may be confusing when thinking about financing your dream home. USDA Loans Direct has made the financing process quite simplistic.
Construction to permanent loans are designed for borrowers who want to build their own home.
This type of loan allows construction financing to be converted to a mortgage type that is permanent when the construction is complete. This saves money and time because the two loans do not have to be secured.
Here are some tips on getting the financing started.
Is Your Property Eligible?
Construction to permanent loans require your home to be an owner occupied residence or your second home. The property must be a single family, one unit, detached home. USDA Loans Direct requires the utilization of a licensed builder in constructing your home.
The Loan Application Process
When you are prepared to start the application process, contact an expert at USDA Loans Direct. You will find the application process not too much different than the process of applying for a regular home loan. In addition to your financial information, the following is also required:
A single copy of your construction agreement with your selected builder which specifies the total cost of your home and all options, upgrades and the value of the lot.
- A land contract for your lot where your house is being built, if applicable.
- A copy of the façade of your house and the floor plan, if applicable.
The deed to your lot, if applicable.
When all documentation is received, the financing decision is typically made with a 48 hour time frame.
Closing on Your Home Loan
After your loan approval, a draft of the loan commitment will be drawn up which will detail all requirements and legal issues for your particular loan. This document will be provided to you at loan closing but you will receive a sample document which you can review in advance. Upon closing, sufficient cash will be necessary to cover the down payment and closing costs.
Drawing on Your Home Loan
Once your fund for down payment has been exhausted, you can then begin drawing funds needed from your construction to permanent loan. Interest payment will not need to be made until you begin to utilize these funds.