Written By: Travis Carter : Construction loans
Learn how to finance new construction with no money down and understand the credit requirements to get started. There are some extra steps involved in new construction loans but knowing this, you can make the process easy. The reward of building your dream home far outweighs any challenges you will face during the construction process.
Applying for a construction loan is easy. Make your loan officer aware that you are applying for a construction loan and confirm that the bank offers a construction loan program. Ask about the minimum down payment requirements to make sure they have a loan program that works for you.
Prepare your income documents in advance so you are fully prepared to proved any requested documentation. Gather your most recent 2 paystubs and the most recent w2 form you have received. If you are self-employed, make sure you have two years of complete tax returns. If you receive retirement, pension, or disability, gather your award letters. An award letter is a letter mailed to you annually that tells you how much money you will receive every month. If you have any issues finding your documents, discuss this with your loan officer. Many times the construction loan officer can help you request the documents that you need.
Finding a builder may seem easy but in reality, there are other considerations required. Most construction lending banks require that the builder is approved by them. The builder approval process includes reviewing the contractor’s financials, evidence of insurance, and in some cases references.
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