Construction Loan

While building your dream home can be an exciting prospect, you need to go into the process with your eyes wide open. The construction process can be complex, frustrating and costly. Unlike a mortgage used to buy an existing home, where you can borrow 100% of the purchase price, a construction loan requires that you have money set aside for building your new home.

In addition, expect that you will need decent credit at the very least. Good or Excellent credit makes the process that much easier.

The advantage that a construction loan has over ordinary mortgage products is that the loan is based on the future completed value as opposed to the property's current value. The disadvantage that is characteristic of construction loans is that they work on a reimbursement basis. This means you will need to pay for some of the building costs out of pocket and get reimbursed for them subject to an inspection. Once you are reimbursed, you can and expect to, use that money for the next phase of the project.

Where equity allows, current homeowners that are planning to build or do a substantial remodel, should exhaust all options available that allow the use of their current home equity. A traditional home equity loan or cash out refinance, will allow you to build without the reimbursement aspect or the required inspections. In the long run, this is the less expensive way to go. If this option is available to you, be sure to investigate it completely.

Express Home Mortgage Construction Loan Products

Construction to Permanent Loans
Major Home Improvement Loans
Bridge Loans
Lot Loans

Express Home Mortgage Construction to Permanent Loans allows for a construction period of 6 to 12 months. Other options are also available. And when your project is complete, the loan simply converts to a permanent mortgage.

In addition to standard credit documentation, you should be ready to provide, at a minimum, copies of the following documents to start the process:

Final plans and specifications. These are needed in order to obtain an appraisal.
Purchase contract for the lot (or Settlement Statement if you've already purchased it)
Property profile (description of materials)
Line Item Cost Breakdown from the builder
Builder's construction contract
Copy of Builder's license
Builder's statement or application

Keep in mind that you need to obtain the necessary building permits for your community.

Express Home Mortgage Major Home Improvement Loan is for existing homeowners that don't want to move but would like to have their dream home anyway. It is a second mortgage that uses a loan to value calculation based on the future completed value of your property. This gives you more borrowing power than the standard second mortgage options available.

Express Home Mortgage offers Bridge Loans to those building their new homes. This type of loan, a second mortgage, will allow you to utilize your current home equity before you sell the house. When the old house is sold the Bridge Loan is paid off.

Express Home Mortgage Lot Loans allow you to buy the site of your future dream home. This is usually a short term mortgage (up to 2 years) that will be paid off by the construction to permanent loan.