How to Get a Construction Loan for a New Build Home in Columbia, MO
Need Help Financing Your Custom Home in Mid-Missouri? Learn More About Construction Loans With Our Professional Contractors
It’s easy to visualize your perfect new home in central Missouri, but budgeting for it can be more challenging. If you can’t wait a moment longer to build your custom home, but need help with financing, a construction loan could help lighten the load. Construction loans in mid-Missouri operate very differently from a traditional mortgage, and it’s important that you take the right steps and choose the best builder. Explore the basic steps of getting a construction loan, along with the various types of financing available to homeowners, with the experts at Rave Homes!
What is a construction loan & how is it different from a mortgage loan in Columbia, MO?
In general, a loan is the process of borrowing money to fund a project that will need to eventually be repaid. With a construction loan, the cost of building a new home is covered, while other factors like your mortgage can be added to the loan or established separately. It all depends on the terms and type of loan you choose for a mid-Missouri custom home. However, mortgage loans are intended for existing homes on the market, and homeowners typically start paying interest immediately after closing in this case.
Steps for Getting a Construction Loan on a Mid-MO Custom Home
Discuss your plans for a new home with a loan officer in mid-Missouri
First, you’ll need to research loan lenders in your area who are experienced at giving out construction loans. This professional will determine your eligibility for loans based on different factors like your credit history and debt-to-income ratio. They can also give you a clearer outline of budgeting and building a new home in central Missouri. Consider multiple options before choosing your loan officer by researching different credit unions and regional banks. Once you’ve found a lender that will offer you the best deal in mid-MO, you’re ready to start the path to your dream home!
Gather the documents needed before custom home construction
Building a custom home in mid-Missouri requires lots of paperwork, especially if you are trying to get a construction loan. After your loan lender has learned more about your financial needs, they will ask you to collect the necessary documents for securing a new home. These documents often include proof of employment, tax returns, pay stubs, and more. In some scenarios, the lender will also request a contract with the home builder you choose.
Submit an application for pre-approval on your construction loan in central Missouri
A pre-approval is essential for letting you know how much money you’re allowed to spend on your custom home project. It will also give you an advantage when searching for a plot of land and demonstrate your ability to handle the loan and construction process effectively. Pre-approvals last anywhere from 30 to 90 days, so you will need to begin construction fairly soon after you receive the “OK”.
Find the perfect lot for building your mid-MO home
After all the documents are signed and approvals are made, you can finally start on your custom home in mid-Missouri. Before building can begin, you’ll need to reserve a lot for sale that will be the location of your new home. When looking at available land, be mindful of the neighborhood you choose and how it can tie into the family’s lifestyle. Is the lot a fair distance from the school your children attend? Will you have a long commute to work? You may also be wondering about parks or recreational centers in the area for entertainment. Keep these factors in mind as you pick out a spot for your future mid-MO home.
Look for a qualified custom home contractor in the Columbia, MO area
One of the most significant decisions you will make during the construction loan process is who will be the builder of your new home. Your custom home builder should meet any requirements made by your lender and have several years of experience to back up their craftsmanship. Make sure to ask questions and do extensive research when looking for the ultimate home contractor in mid-Missouri – look for proper licensing, positive reviews from locals, and an impressive portfolio of beautiful homes. At Rave Homes, we serve all kinds of families in Columbia, MO and surrounding areas to bring them gorgeous custom designs!
Finish paperwork with your mid-Missouri home builder & close the loan
When you decide on the best custom home contractor, send all important details to your lender: construction plans, the budget, building permits, and more. Once they approve of everything and close the loan, you’ll receive an overview of the funds going towards your new home, and your lender will distribute a schedule for the payments in alignment with the construction process. Then, when contractors are finished building, you can celebrate the arrival of your incredible custom home in central Missouri!
Types of custom home construction loans in Columbia, MO
Construction-only loans
The most basic loan you can get on a custom home in mid-MO is a construction-only loan. With this type of construction loan, the lender sends financial support to have the home built and nothing more. Most homeowners repay the debt at the end of the term and apply for a traditional, separate mortgage on the house after construction is finished.
Construction-to-permanent loans
Another choice you can make is to get a construction-to-permanent loan, in which a permanent mortgage is added to the construction funds. This makes it easy for families to transition into routine mortgage payments once the custom home is complete, and prevents the duplicate closing costs that can occur from construction-only loans in mid-Missouri. In this case, you will also pay interest on the loan during the home’s construction.
Renovation loans on a mid-Missouri home
For homeowners who are just looking to improve their current home and don’t want to invest in a new project, renovation loans can cover the costs associated with remodeling. There are several programs that offer financial help for renovation projects, and a qualified builder can make your house look brand new with the right building experience.
Find a Construction Loan to Fit Your Custom Home Needs & Build With Mid-Missouri’s Best Contractor, Rave Homes
Why wait to build a better home for you and your loved ones in mid-MO? Reach out to Rave Homes, your local contractor with an eye for modern home construction. With our expertise and communication, we will alleviate the stress of getting a construction loan. Contact us today, and our contractors will be prepared to meet you and your lender’s expectations.
