The Construction Loan on a New Home

When obtaining a construction loan, it is essential that everything is done step by step and the process is not rushed. You do not want to pursue the construction of a home that you cannot afford. When you get pre-qualified for a loan you are given some idea of what your monthly payments will be.

The best construction loan lenders are those with experience. This is primarily because construction loans are more complex than your average mortgage loan. Many national banks have developed construction loan programs, but as always, you must be sure to compare the rates of numerous banks in your area. Before signing a contract towards the completion of your home, pay close attention to the banks lock-in policies and interest rates. Most of these loans are set at the prime rate or a general short-term rate.

In providing a construction loan of any kind, lenders want an explanation of the construction plan. Before they give you money to build on your property, they want to know that you will still have the capital to pay them back. Because construction loans do not fall under the standard guidelines of the Fannie Mae and Freddie Mac corporations, most construction loan lenders have a developed a separate system of interest-only payments during the construction process that are then due at completion.

The construction process is officially completed when the home receives its certificate of occupancy. Many borrowers use a construction-to-permanent financing program that allows them to transfer their construction loan directly into a mortgage when the home has its certificate. Such programs allow the homeowner to avoid the hassle of refinancing. There are many different types of construction loans out there and it is important to be aware of all your options. For example, often the property itself can be used as equity on the construction loan. For more financial tips in homeownership, there are a wide variety of accessible websites including http://www.1refinanceloan.com and http://www.1californialoan.com

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How Can You Benefit From The Mortgage Market Meltdown?

Unless youve been living on a Deserted Island, Like Tom Hanks in Castaway, Im sure youve been hearing about the mortgage market meltdown. I wanted to take a moment to shed some light on what might be the greatest opportunity of your life.

Only a few months ago, credit was easy to get. Anyone who could fog a mirror could get a mortgage. Now with over 115 lenders either bankrupt or closed it would appear that we are in the worst credit crunch in history.

How can you benefit from this apparent disaster? Thats a great question, I will get to it in a minute, but first, how did we get here?

Easy credit caused you to spend more than you wanted too. With historically low rates and the longest real estate boom in history, Wall Streets appetite for mortgage backed bonds was insatiable. They just couldnt get enough of them.

Homeowners everywhere were refinancing to take money out of their homes. People would pay for everything from home improvements and debt consolidation to daily life expenses with a mortgage refinance.

Then the real estate market slowed and people started to default on their loans. It seemed like it might be contained to just the subprime market, if only that were true.

Then American Home Mortgage, the 10th largest mortgage bank in the US fell victim to an already troubled market place. They went bankrupt in less than one week.

Now lenders are raising rates and tightening up guidelines. It would seem that there is no way a less than perfect borrower would have any chance of getting a loan.

The lenders problems can be your opportunity. Many lenders are desperate for new borrowers. The only way they can stay in business is by making mortgage loans. That is where your opportunity comes in.

While many of you out there will have to pay a higher rate to consolidate your debt, it is still far cheaper than the credit card interest. This time around though, you need to have a plan.

You need to work with a mortgage professional that will help you budget yourself. In the past too many people werent worried about refinancing and then wracking up their credit cards again.

With all the cheap easy money that was out there and with home prices appreciating 20% or more per year, you could just refinance and pay off your credit cards again in a year or two.

Its time to find someone who can guide you through the process and help you avoid going back into debt this time. Its time to stop looking at your home as an ATM machine and get back to basics.

Consolidate your debt, cut up the credit cards, follow your budget and improve your financial life. That is what your new opportunity is!

Marc Savage is a Nationally Recognized Mortgage Expert and Host of Your Home Your Money on AM 540 WLIE Saturday Morning at 10AM. Marc specializes in helping homeowners who have had a bankruptcy or other credit challenge find payment relief, achieve financial security, restore their credit and receive peace of mind. He is also a founding member of the National Association of Responsible Mortgage Lenders. Visit his website at http://www.yourhomeyourmoney.org for more information or call him direct at 800-592-5626.

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