Whether you choose to renovate or build a new home, one thing remains the same: Home construction is expensive. If you are considering building your dream home, you should consider the benefits of applying for a home construction loan in Atlanta. Unless you have saved up money for your dream home, most people don’t have the extra cash around to put it into a home. That’s why there are several businesses and resources in Atlanta that lend homeowners money to finance the construction cost of building a new home. If you are considering building your dream home, this post is for you!
What are home construction loans and how to they work?
A construction loan is a short-term loan used to finance the building of a home. The homeowner takes out a construction loan to cover the costs of the building project. Since these loans are short term, the loan is only good for one year. Once the home is built, the borrower can choose to refinance the construction loan which ultimately turns into a permanent mortgage or apply for a new loan to pay off the construction loan. Depending on the loan you take out, some construction loans require the borrower to pay off the entire loan before the project is complete.
When it comes time to apply for these loans, you will want to work with an experienced loan officer and go over the full details of the construction project, including the timeline and your budget. Once the loan is approved, the borrower will then be put on a construction timeline and will be expected to make the interest payments for the loan as the home is under construction.
What is the difference between a construction loan and a home renovation loan?
There are quite a few loans out there and its important to know the difference between the loans. You might be wondering what the difference is between a home renovation loan and a home construction loan. The answer is simple. Home construction loans are for building a new home and renovation loans are for those who are making renovations to an existing home. A renovation loan is generally for a period of up to one year with no prepayment penalty, and where you can have one set of closing costs. On the other hand, a home construction loan can last for a longer period of time and differs from project to project. It’s important to note that some businesses do not differentiate between home construction loans and home renovation loans. When its time to take out a loan, talk to a loan officer to guide you in the right direction.
Where to get a home construction loan?
As you may know, money and loans can be a sensitive topic for some people. When choosing where to get your loan, its important to consider honesty. You will want to find a bank or loan officer in the area that you can trust and openly talk to about your home plans and what you will need to apply for a loan. Honesty and trust is important so they can determine the best options based on your needs.
How much money to ask for?
Once you have determined you need a home construction loan. The next step is to figure out how much the loan should be for. When it comes to loans, we recommend that you ask for more than you think you need. If you have ever done construction in a home, you might already know that there can be quite a few unexpected costs. For that reason you will want some wiggle room. Try asking for the largest amount because many times, banks limit the amount they can provide for you and you will need some bargaining room. Start high and work your way down to a reasonable amount if needed.
How to determine project costs?
If this is your first time building a new home, you might be confused as to where to start. You might have a number in mind for your overall budget, but you may be unsure of just how much it will cost to build this new home. Having a budget in mind is important. Its important to know what you can afford. The last thing you want is to take out a large construction loan that you struggle to pay off. Once you have a number in mind, it’s a good idea to talk to your contractor.
Talking about finances might not be easy for some people and it can become overwhelming when you start to look at each individual cost of the project in your new house. Having a contractor, you can trust will help make this process easier.
When you have a number in mind of how much you can afford to pay for your new home, your contractor should go over the entire plan with you (before going to ask for a loan.) During this time, your contractor will give you a better idea of just how much each part of the project will cost. For instance, how much the kitchen should cost, the bathroom, roof, building materials, etc. With this information, you will have a better idea of how much to ask for in your loan.
Your contractor should also provide you with a detailed plan including all the expected costs. The bank might ask for this information.
Legacy Renovations: Helping you every step of the way
At Legacy Renovations, we understand how important your dream home is to you. After all, its where you spend the most time and make memories that will last you a lifetime. We also understand building a new home is a new process to most people. That’s why we are here to help you every step of the way. Whether you need help planning the project, determining a budget, or you have it all figured out and just need a contractor you can trust, we work with you every step of the way!
Want to learn more about how we can help with the construction of your new home? Let’s talk!
