Finding the right home construction loan involves answering some carefully crafted questions and taking your time to assess every step of the way. Answer the following questions, and you will be well on your way to finding the right home construction loan for you. You can find more information about trusted and reliable home construction loans texas on the internet.
How much time do you have? This is an important question, especially if you have just signed a contract to buy a new house. Each bank will be faster or slower than the next, so it is essential to know what their processing times are before you start.
What type of added features do I need? Some banks offer full offset accounts, which means that you can place any excess funds into this account and attach it to your home construction loan. The effect is that the amount upon which interest is calculated will be reduced by the amount of money you have in your transaction account. This means you will pay less interest on your home construction loan.
Do I qualify for a reduced interest rate? Most banks offer packages where they will discount the rate charged to your home construction loan if you borrow over a certain amount. You can get a discount of up to 0.7% (as at January 2010 ), with some banks, if you are prepared to pay the annual fee which may be as much as $400.
How much do you need to borrow? Remember that banks can only lend up to a certain proportion of the house you want to buy. Some banks will go to higher percentages than others, so you need to determine precisely how much you need after taking into account other things like application fees, stamp duty, and lenders mortgage insurance. Only after calculating these figures can you determine which banks will be able to meet your needs.
Do I need a fixed or variable rate? This will be partly determined by what you are planning for yourself over the next few years. For example, if you are planning a family, you may need the peace of mind that comes with a fixed-rate loan. That way, you know your repayments are fixed, and any variations to the interest rate will not affect you. This way, you can budget for many years ahead. A variable-rate may well be cheaper than a fixed-rate. Still, it would help if you estimated whether this would be able to afford potential rises.
Can you change products easily? Some banks make it easy for you to switch from one product to another. You can take a loan that suits your circumstances now and then change to a different type of investment in a year or so to cater to your changing conditions. This will not apply to fixed-rate loans.
Once you have considered each of the above points, you will be in a better position to work out which home construction loan is right for you. It will also be helpful to talk to a broker about your options. Many lenders offer competitive packages only through mortgage brokers. Spend an hour with your mortgage broker, and it will be time well spent.