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The advancement in technologies has enabled people to obtain loans in order to build their homes. There are some of the best lending institutions that can provide the funds required in constructing homes. These loans are typically known as construction loans. Banks prefer escrow office or the title company’s office as the site for signing the loan agreement.

However, borrowers must learn about the procedure to get the mortgage constructions loans.

How to get construction loans

Here are the steps to be followed by the borrowers in order to get the construction loans:

1. Loan pre-qualification – Borrowers should be pre-qualified to get the construction loans. It is helpful in determining whether or not they can afford to take out a particular amount of mortgage. Moreover, it will also help them to know their future monthly payment amount and that they are eligible for the loans. Apart from that they have to abide by the rules as directed by the loan officers. For instance, borrowers must have an impressive credit score and a lien free plot of land.
   

2. Multiple options – Before deciding on a loan, borrowers should evaluate all the options available at hand. For instance, there are several kinds of construction loans like 15-year fixed terms loans, 30-year fixed terms loans, 3/1 adjustable rate mortgages (ARM), 1 year ARM, 5/1 ARM, interest-only loans and so on.
   

3. Market research – The problem with most of the banks is that they do not offer too many choices for the consumers. So, borrowers can survey in the local market for better rates. Borrowers can contact the department of construction loans of their local banks or the construction loan officers in order to get the basic information. Moreover, borrowers should get in touch with a construction loan brokers so that they get the most competitive rates and a good loan agreement.
   

4. Lender reputation – While taking out mortgage construction loans it is very important for the borrowers to check out the reputation of the lender. Hence, they can approach the local banks or nationalized lenders for loans who will be able to provide affordable rates. However, nationalized lenders do not have the necessary market knowledge at the grass roots level. Therefore, borrowers must enquire about the prior experience of the lenders and the clients they have served before.
   

5. Loan application – Loan officers like to see professionally filled up mortgage construction loan applications. Borrowers need to submit the Form 1003 so that loan officers get a clearer image of the prospective borrowers and their financial condition. Moreover, borrowers must mention the type of loan they want, the amount of loan they expect to get, their residential address, etc.

Last but not the least, borrowers must also provide their social security numbers, debt-to-income ratio, details of additional real estate property owned with their loan applications.