Construction Loans

What Do I Need To Get Construction Loans?

You have always wanted to have your own home built in your own way, and now you are ready. But, you are wondering what you will need in order to apply for a construction loan. Hopefully the information outlined below will give you all the necessary information to be ready for applying for a construction loan.

You will need all the basic information that is usually needed when applying for any type of loan. These include:
* Your Credit – The most important thing in applying for any type of loans is your credit history. They will be looking at your past credit history and how you repaid previous loans.
* Down Payment – How much you can actual put down on the construction effort.
* Collateral – A list of your assets like: stocks or bonds, savings accounts, inventory of the business, real property you own (home, other business, etc.) These are a few of the major considerations when applying for construction loans. For construction loans there is more paperwork and information that you will have to supply to the lending company before they can approve you for construction loans. Among them are:
* The plans of your home which include: the building plans drawn up by the architect and that have been approved through the city or county (floor plan-showing all measurements of the rooms, foundation plan and measurements, electrical and plumbing, and the elevations of the outside of your home) You should be sure to have 2 sets of these – one for the appraiser and one of the loan lending company.
* Materials that will be used in the construction of your home like: type of tile, type of roofing materials, etc.
* Your contract from the person you have decided will build your home. This will include the price you have agreed with the builder that it will cost to build your home. This should be a detailed contract explaining all costs that you and the builder believe will occur during the building of your home.
* Completed Budget worksheet – this should be the total costs of everything combined.

In order to get an approval for a contactor to build your home and for your construction loans to be approved you will need to have:
* A copy of the license of the person that is going to build your home
* References of other homes they have built
* Credit/ Proof of reliability of the person that is going to build your home.

If you have already bought the land and you are wanting the construction loans to build on the property you will need:
* To show a copy of everything you have paid out. (appraisers fee’s, the cost of the plans, etc)
* Purchase price of the land or the estimated of the price of the land

Insurance is another factor that comes into play when applying for construction loans. Some lending companies will ask that certain types of insurance are in place before they approve construction loans. Types of insurance you may need to acquire are:
* Course of Construction Casualty Insurance – this type of insurance will cover fire, extended coverage, builder's risk, replacement cost, vandalism and malicious mischief.
* General Liability Insurance – This insurance cover the property and also people that are working on building your home in case of injury
* Flood Insurance – This is usually only necessary if you are building in an area where flooding is prominent.
* Lot Loans – This type of insurance may not be necessary

Talk with different lending companies concerning construction loans and be sure you have all of your financial and construction information together. You will want to check out the interest rates and loan options from different loan companies for your construction loan.