Before you start the construction on your new dream home, there are some things that you will need to do well in advance. In addition to creating the blueprint with every detail of where you want your bedroom, kitchen and gym to be, you need to make sure that you have the finances to start this huge project or massive undertaking. Because the size of the home can vary from one prospective homeowner to the next, the amount needed to complete a construction project can range from tens of thousands of dollars to hundreds of thousands of dollars or more. So, if you are looking to build your dream home with ease, you need to make sure that you have the financing secure.
First of all, you need to know that there are at two primary types of construction loans that you can apply for when the time comes. Both have their own features and specifications for approval. Knowing the difference between each type can help you to determine which one is best for you and your specific needs. Here are the names of each and a brief description.
One-Time Construction Loan
The one-time construction loan is presently considered to be the industry’s standard. One of the primary reasons for this being the case is that most construction loans milwaukee wi have quite a few advantages included in them. To start, when people are approved for these loans, they do not have to worry about high interest rates. This is because the interest does not change when the loan applicant applies, and the interest rate is locked in. This simply means when the loan is approved, the owner can expect the interest rate to remain the same throughout the life of the loan.
This one-time construction loan has several different great benefits. Some of which are keys to making this loan so attractive to the prospective homeowner. For instance, there are numerous fees attached to this kind of project and they can be very expensive. Based on the means that the owner uses to pay these fees, it may even come from an individual’s pocket. However, when the owner of the property would like to take another route with these payments, they may decide to roll the extra closing cost (surveys, engineering plans, and soil tests) into the actual loan amount.
Interim Construction Loan
Another construction loan that you may need to become familiar with is the interim construction loan. The interim construction loan can be described a short term loan. This loan has quite a few more requirements attached to it. So, it is important for everyone to know what they are prior to considering it. This loan has to be paid off in full at the end of the construction so the borrower must be able to meet these commitments before making the application. It is usually much higher to obtain because of the risks associated with these applications. Therefore, they are not the ideal for those who want a good loan to borrow.