After you’ve acquired a piece of land where you plan to build your home from scratch, the next thing in order is to start the building process. But, how is that possible if you lack the money to fund the construction?
When it comes to financing your home’s construction, you can always apply for construction loans Houston. Such loans offer several benefits. Like any other types of loans, each has its own advantages and disadvantages. Knowing what the pros and cons will help you decide whether or not to a construction loan is for you. In this article, you’ll learn about the numerous benefits one can get out of construction loans, and these are the following.
Build Your Dream Home
One of the best advantages one can get out of construction loans is that you get to build your dream home from scratch. Nowadays, most home comes prebuilt, which means most people who would like to acquire a home is to settle for something that is close enough to their desired home. By building your house from scratch, you can customize it to your heart’s content.
Easy Approval and One-time Qualification
Just like any other type of loans, you can easily qualify and get approved as long as you have the right requirements at hand. The conditions will depend on your lender, but most will need you to provide a blue book, find a qualified builder, a minimum down payment of 20%, good credit score, proof of income and appraisals. One only needs to qualify for long-term financing then you’re eligible for a Construction-To-Permanent loan.
Fixed Interest Payments Only During Construction
The great thing about construction loans is that lenders won’t ask borrowers to pay the loan in full until after the building is complete. One only needs to pay a fixed and lower interest rate every month. This allows borrowers to have enough time to save up for the principal and pay on time.
One great thing about construction loans is its ability to reduce your risks against two things. First is the reduced risk against increasing interest rate. Once approved for this loan, you can be sure that you’ll be paying a fixed interest rate, thus protecting you against increased monthly rates. Second, you don’t need to worry about the need to apply and get qualified again after construction is complete.
People who get qualified for construction loans get to enjoy more flexible terms. One can tailor terms quickly and effectively according to your specifications. While it’s true that borrowers will need to provide a detailed plan, you can still work on your terms round your project plan giving more flexibility than traditional loans.
One can create instant equity while building your own house. Compared to saving plans which will take you about 10-15 years just to build equity, building you home instantly create equity. For example, the total cost of making your home is $500,000, and after completion, it is valued at $550,000. You managed to create instant equity of $50,000.
Good Read: How to Build Equity: Own More of Your Home
Higher Satisfaction Level
Buying a house can give you a high level of satisfaction since you’ll finally own a home. However, building it and being there from start to finish sets the bar at a higher level. Not only that but it gives a greater sense of belongingness and achievement that no prebuilt house can provide.