Do you want to take out a
construction loan? If yes, then you will have to show your lender
that you will be able to make the loan payments on time and the
property’s value will be much more than the amount you will borrow.
So, if you want to purchase your own home, a construction loan seems
to be a suitable option for you to accomplish your long-awaited
dream. You should take out a loan that you will be able to pay off
within a definite time period. In case, you fail to do so, you may
refinance your construction loan so as to make the payments
affordable for you.
3 Steps to refinance
your construction loan
If you are finding it
difficult to manage the construction loan payments, you may opt for
refinancing. Have a look at the 3 steps to refinance your
construction loan.
-
Search for
construction takeovers – It is quite difficult to search for
construction takeovers in the present market. If you are reaching
your time limit for the completion of construction loan payments and
the home is yet incomplete, you will have to look for a mortgage
broker who will deal with several banks. This will provide you more
chances of searching for the lenders who will actually be willing to
purchase your old construction loan, offering you more money and
time to end the project. However, you need to know that all
construction lenders will not want to purchase and take over an
existing project.
-
Apply for a
refinance loan – If you are late by 45 days from the
approximate end of your project, you may apply for a refinance loan.
In case the project is nearly complete, you should not waste any
time in making an application with a lender. Once the home is
complete, the appraiser will do a final assessment on the home
stating it is completed according to the plan and is still valued at
the original price. Your builder will have to offer you a
Certificate of Occupancy (CO) from your county building department.
This is a final examination that indicates that all stages of your
home are complete. Give the new lender your insurance information as
your builder's risk insurance will become your homeowner's
insurance.
-
Request for a
time limit from your builder – You may request for a time
limit from your builder when he assumes that all stages of
construction will be completed within a particular time period. This
is required in order to organize the final inspections prior to the
closing and fixing a closing date. Taking out a new construction
loan means repaying your old construction loan and as such, you
should make it a point to find out when the new lender requires all
construction and want to work on your project.
Thus, by following the above steps, you
will be able to refinance your construction loan.