Everything you Need to Know About New Home Construction Loans
A new home construction loan is a loan that allows you to receive funds that you need to build your dream home. Even though you are in a way still buying a home, through the construction of it, new home construction loans differ from traditional home loans.
An existing home loan will commence charging you interest on the whole borrowed amount immediately because the home already exists, and you have direct access to it. A new construction does not have these benefits, which means that the entire amount will not be used when it comes to charging of interest during initial stages.
Money is disbursed whenever needed, and you have one year to complete the complete construction job. Interest is only charged on the money that is disbursed during that period. On the basis of the income that you are able to prove through proper documentation, you can eventually finance up to 90% of the estimated future property value.
Post completion of the construction of the house, the permanent loan starts with interest being charged on the complete loan amount.
How it Works?
You only need to close one time for the construction of your home. The financing aspect during the construction and the permanent loan that will follow are all done in a single sitting. There is only a single set of loan documents, which eventually means that you need not worry about additional closing costs from additional signings.
You are also given the ability to lock in your rate of interest at the time of signing, all while possessing up to 12 months to complete your entire project. But, how can one predict the future value of something before it is even constructed? The appraiser will ask for the following information:
· Type of house that will be built
· Raw materials that will be used
· Cost of all materials
· Labor costs
· Cost of land and its current value
· Amount of money that will be spent on planning and permits
You also need to devote sufficient time in choosing your general contractor and what the contract terms and text for the construction state. After figuring it all out, you would be able to go ahead with your plans.
Aavas Financiers Ltd offers new home construction loans to customers belonging to low- and middle-income segments in rural and semi-urban areas. These customers are credit worthy and may not possess proof of income documents like IT returns, salary slips, etc. and hence are excluded by banks and large housing finance companies.
Newly-constructed homes are definitely worth every minute of time and effort that are put into them. Just ensure that you take your time and gather all requisite information, and the process will be completed before you even know it. For more details please log on to https://www.aavas.in/about-us/
