Construction Loan

Construction Loan

At this point we felt comfortable enough with our pricing and our house plans that we needed to contact the bank to make sure that we could get a construction loan for the amount of house we were planning on building. Luckily for us when we bought our first house we took out a construction loan to fix the place up. So we felt like we knew the process well and really wanted to go with our local bank who have always treated us right and we felt always had our interest at heart. Also luckily for us we had planned on buying an existing home so we had already been in touch with our bank and had been pre-approved for an amount which was higher than we felt comfortable spending, so we were pretty sure we shouldn't have much of an issue with this phase.

So we called up the bank to setup a meeting, during our meeting with the lender we let them know how much we were looking to spend on the new house and the lot which he was completely okay with. After getting the actual dollar amount approved they explained to us how the construction loan worked and that we would be making interest only payments until the construction is completed and then we roll the loan into a conventional 30 year mortgage. I have to say that our process was simple, but I think this was due to the familiarity we have with the bank and also the bank has with us. I have read other blogs where finding a lender takes months, luckily for us it was simple and now we could move on to finding the lot we would build on.