Typically a New Home Builder helps acquire a Construction Loan
There are many different types of options for construction financing for your home. First and foremost is ‘cash’ of which usually yields a slightly better price for you. Of course if the project is small a credit card or even opening up a line of credit at a material supplier such as Lowes, Home Depot or Menards may be beneficial.
For most mid-size projects, it is necessary to borrow against the value of your home. Different lenders have different names such as a ‘Home Improvement’ or ‘Home Equity’ loan. To qualify, you must own your own home, be on time with your payments, a fairly good credit score and a ‘Loan to Value’ (LTV) usually under 80-90%. An example would be if your your home is currently worth $200,000 and your current mortgage balance(s) is at $140,000 then you could qualify for a $20,000-$40,000 loan ($200,000 * 80/90% less $140,000).
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Of course if you plan on adding on quite a bit of space, such as an Home Addition or finishing off your basement, there is another option to pull even more money. That is to ask for a construction financing loan that takes into account the ‘future’ appraised value upon project completion. This is how people can hire a Builder.
This works well for a big home addition too. These larger projects usually add quite a bit of finished square footage, more rooms and/or bathrooms. It is quite common that the after-construction value of your home, will greatly increase your propertys worth.
This added equity is borrow-able without a further down-payment. The key here is to qualify for a loan that takes into account the ‘future’ appraised value. They determine this with the help from your builder. Building Dreams provides them information to review your current appraisal, our working blueprints and detailed building material specifications for your project.
For more information on our company as a Custom Home Builder or a new home builder you can go to our About Us page. Please email us about your project.