Now………what do we need next?

Hummmm…..how about some money to cover the cost of construction – commonly referred to as "interim financing".

This could be an easy step or it could become a total bummer. We happen to have an employee credit union that furnished our interim financing for us but, we went to many banks and financial institutions trying to get interim financing before one of our friends suggested we try the credit union. Needless to say, none of the other financial institutions were interested. I will grant that it was a rough time for the economy about then but still, it was a very frustrating and disheartening time.

If you are not familiar with interim financing and the various requirements, be sure you sit down with someone and find out just what it is, how it is used, and what is required of you. Some of these items will depend on your lender.

Another stumbling block here may be your desire to be your own contractor. Unless you are extremely well known to the loan manager and have a good track record with them, they may not even consider financing an owner-built home during the construction phase. They may also have regulations that require a licensed General Contractor on the contract.

One other thing you really should know before trying to secure financing, they will want to see a complete set of plans which they will send to an appraiser for an estimate on the cost to build. This is something that you should also do prior to requesting your loan. If your income is sufficient to secure a loan of say $60,000 and the appraiser estimates the cost of construction at $80,000, that leaves a difference of $20,000 that you will have to show as cash on hand.

Talk to a few builders and find out what the average cost per square foot is in your area. This will give you some idea of the cost of building your dream home. I have some links below to various financial sites on the web that may help you with some of this chore.

Now let’s get on with the show!!! Click on "Construction"

 

Mercantile Mortgage offers residential construction lending with interim financing for any custom home. Loan products include no-income and jumbo conventional loans, VA, FHA, and second mortgages.  Click Here

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