Home Construction Lending
Be prepared for building on your land with a Home Construction Loan from Galaxy Lending Group.
While some people may search for the dream home in a sea of pre-built houses, other prefer to build their dream home from the ground up. Once the plans have been drawn and the land bought, you will need to determine your financing needs for the construction. Galaxy Lending Group offers Home Construction Lending to help you with your new construction project and financing.
What is a Home Construction Loan?
A construction loan is typically a short-term loan that is used to pay for the cost of building a home. It is usually offered for a set term to allow you the time to build your home. At the end of the construction process, when the house is built, you then get a new loan to pay off the construction loan (this is also call the “end loan”). Basically, this means that you will refinance at the end of your Home Construction Lending term and enter into a brand new loan of your choosing, that you feel is a more conventional financing option for your newly completed home.
Qualifying for a Home Construction Loan
1. A Qualified Builder Must Be Involved. A qualified builder is a licensed general contractor with an established reputation for building quality homes.
2. The Lender Needs Detailed Specifications. This includes floor plans, as well as details about the materials that are going to be used in the home.
3. The Home Value Must Be Estimated By an Appraiser. Although it can seem difficult to appraise something that doesn’t exist, the lender must have an appraiser consider the blue book and specs of the home, as well as the value of the land that the home is being built on. These calculations are then compared to other similar houses with similar locations, similar features, and similar size. These other houses are called “comps,” and an appraised value is determined based on the comps.
4. You Will Need to Place a Down Payment. This ensures that you are invested in the project and won’t just walk away if things go wrong. This also protects the lender in case the house doesn’t turn out to be worth as much as they expected.