Once you have chosen the ideal piece of land, picked out the design of your new home, and selected a builder, the next step is to figure out how you are going to pay for it. Because the home has yet to be built, you will not be able to use it as collateral to secure a traditional mortgage. Therefore, you need to learn how you can use a construction loan in Kalispell to build the home of your dreams.
A home construction loan in Kalispell can finance the cost to build a new home, major renovations on an existing home, as well as the land on which the home sits. Typically, a construction loan only lasts for a year; then it must be paid in full or converted to a mortgage.
Types of Construction Loans
There are two popular types of home construction loans. They are standalone construction loans and construction-to-permanent loans. It is important to know what is right for you.
Also referred to commonly as a single-close or one-step loan, a construction-to-permanent loan changes automatically into a traditional mortgage once the construction is complete. Such a conversion may be called a refinance or modification by the lender. However, there is no need to begin the loan process a second time.
A standalone home construction loan in Kalispell is a short-term loan for financing the construction of a home. Once the construction project is complete, the loan must be paid in full. In the event funds to do so are unavailable, the homeowner needs to apply for a standard mortgage. Choosing this type of loan will allow you time to shop around for the best terms and conditions before applying for a mortgage.
The process of obtaining a home construction loan in Kalispell is much like applying for a traditional mortgage. However, in addition to the loan application, the lender may also require vetting the builder.