construction Mortgages
Construction mortgages are much more difficult than your typical home purchase or refinance because of the inherit risks associated with lending on a home that during the construction, is significantly less marketable than your average home
Almost all lenders are concerned that their money lent is repaid, so underwriting of construction loans usually focuses on how that might occur.
Funds are taken from the loan through a process referred to as a “draw”. A draw is the method by which funds are taken from the construction budget to pay material suppliers and contractors. Each lender has different requirements for processing a draw. For example, some allow the borrower to request draws online, while others require paperwork and periodic inspections. This process helps ensure that the loan proceeds are actually used for the construction and that the construction process is moving smoothly.
Usually each draw is advanced based on the remaining cost to complete of the projects.
Instead of paying each month during construction, most construction loans have extra funds borrowed right away and stored in a locked account known as an “interest reserve”. Each month the monthly payments are taken from the account so that the borrower does not have to start paying out of pocket until the project is completed.
The basics criteria of the underwriting of a “construction mortgage” pretty much are the same :
The major difference is how the mortgage funded by different construction draws.
So rather than shopping at multiple financial institutions and negotiating with each financial institution and arm wrestling them to give you the best deal, it’s one phone call and we do the rest for you.
As your mortgage broker we have extensive knowledge of the lenders’ criteria , which could be very different for different lenders. We are closely in touch/connected with more than 50 lenders to find the best solutions for our clients.
By submitting your application to the right lender , we would get you the best mortgage in terms of rate, amount , term and amortization.
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