Not every home buyer knows that a traditional mortgage is not going to work if you are planning to build a new home rather than buy a home that is already built. Because the home being purchased is used as the collateral on most traditional mortgages, lenders are not willing to fund a loan for a house that is not yet built. So buyers need to use Construction Loans in Arizona when they are building a brand new home. And before jumping into the first construction loan that you find, you need to understand that there are several different types of Construction Loans in Arizona and that they are best suited to different needs.
A construction to permanent loan is one of the best for buyers who want the construction loan to convert to a traditional loan once the home construction is completed. This loan provides the funds needed for the construction draws and then you pay the closing costs for the loan once the build is finished and you have locked in an interest rate. This saves you the time of reapplying for a traditional loan when it is time to do the final payment on any Construction Loans in Arizona.
If you are only interested in funding the construction of your home, then you would apply for a construction-only loan. You would need to find an alternative loan for your traditional mortgage. But this allows you to secure the construction loan and begin the project while you continue to research and apply for a mortgage. The downside is that with two separate loans, you pay two independent closing fees.
If you are buying a home that needs a great deal of renovation, then there are loans that are specifically designed to meet those needs. This can include a home equity loan or a home equity line of credit or even a personal loan. Due to the variety in this type of loan including the length of the loan and the loan amount, the terms will vary greatly. It is important to carefully compare any loan offers that you receive to make sure that the terms meet your needs, that there are no early payment penalties and that you understand the total cost of each loan so that you can make the best and most affordable choice.
In the case of an end loan, the build assumes all of the expenses of the home construction including the materials and the labor. When the home is completed, you purchase the home from the builder at the agreed upon price. This is typically what most new homebuyers elect to do as it is the least complex process. The buyer and the builder have a contract for the home construction and purchase but only a small down payment is required prior to the home’s completion. Understanding all of the options for a construction loan will allow you to select the choice that is the least complex but still is affordable and meets your needs for timing as well as other terms.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.