HomeStart Capital is one of the few lenders in Houston and surrounding areas that can still do one-time and two-time Construction Loans. Construction loans are a special type of loans in which the proceeds are used to pay for the construction of the property. The terms will depend on the types of loans you apply for. In most construction loans, you pay interest only during the time of construction. These loans tend to include terms to ensure that the project is completed. At HomeStart Capital we can help you refinance your construction loan into a permanent loan. It will be changed to a normal mortgage loan when the construction is complete and the property becomes the collateral.
One Time Close
The Construction Loan Terms and the permanent loan are determined at the beginning of the process. Sums of money will be disbursed from the loan principal periodically to the builder until completion. The borrower will make monthly interest payments only on the amount disbursed during the construction phase. Upon completion of the home, the loan will roll over into the permanent phase, and the borrower will make monthly payments in accordance with the terms of the note. On these types of loans the rates are slightly higher than the average loan since the borrower is reducing the risk of market movement during the time of construction.
Two Time Close
A construction loan is done for the time of construction. Once the property is completed, the loan is refinanced into a permanent loan and the borrower is eligible to qualify for the best rates available at that time. Call your professional loan officer in Houston to learn more about the pros and cons of construction loans (713) 275-2785.
How It Works
The simplest form of construction loan is a loan that you take to build your own home. If you want to construct a building for business use or for rental purposes, you can also apply for construction loans. The fundamental guideline we follow when extending credit is to check if the borrower will be able to pay the loan back. The lender would be primarily looking at the expected income. No matter how valuable the property turns out to be once it is completed, no lender will loan more money than what the borrower can afford to repay. Even though the borrower will make interest-only payments during the time of construction, the borrower should qualify with the full projected monthly payment. It is imperative that you learn all of your options before you start any type of construction. Call to set an appointment with one of our professional loan officers today (713) 275-2785.
Benefits
The primary benefit of the construction loan is that it enables you to build your own house. Because you only have to make the interest-only monthly payments until the construction is complete, you can completely focus on the construction.
Timing
You should start investigating construction loans as soon as you have decided to build your home. Even if you are unsure of the cost of construction, you can meet with one of our professional loan officers to get the necessary details.