Constructions Loan to Build or Renovate Your Home in NY: An Overview

Construction loans are vital for Americans who want to build or remodel their dream home. Unfortunately, most people do not have the liquid cash to pay for this work, so they turn to financial specialists who offer construction loans. Here are important facts to know about getting construction loans in New York.

Who is a good candidate for a construction loan?

Certain construction projects are best financed by developers or home builders. These firms then sell new homes to home buyers who don’t need construction loans.

What are the projects that won’t qualify for a construction loan?

Condominiums of Co-Operative apartments are not eligible for TD construction loans at this time. Nor are construction loans through FHA or VA.

What is included in a TD construction loan?

Each loan is customized according to the borrower’s needs. You can get fixed-rate or adjustable-rate options for structures with 1-4 units.

What is a construction loan draw schedule?

After the lender approves your loan, you’ll follow a draw schedule, which is a detailed payment plan. It encompasses the financial aspects of your home construction project. The lender provides phases of funding as the project develops. The draw schedule is decided between you and the builder.

How do I decide the loan amount?

The first talk with the builder to get an estimate on the construction costs. Make sure your budget supports the monthly costs. Some construction projects encounter extra costs as changes are added. Although construction loans cover the cost of land, labor, and materials for building the home, they don’t cover living expenses while the work is being performed.

How can I apply for a construction loan?

Apply online or at a financial institution that offers construction loans. It’s similar to the process of applying for an existing home purchase. The loan officer reviews your application, the sales contract, and other relevant details.

What documents should I provide?

You need to provide documentation about your basic debt, income, and asset information. You’ll also need to present a signed construction or purchase agreement with the builder or developer. Meanwhile, the builder must provide financial, licensing, and insurance information. If you’re planning a DIY project, you’ll need to prove to the lender you have the appropriate experience, license, and insurance.

How much down payment do I need?

Your down payment for the construction loan will be 20 percent of the sales price or 20 percent equity in the transaction.

One way to tap into construction loans is to search for “construction lenders near me.”  However, you will still need to narrow down the list after researching each lender. Ultimately, you need a lender who listens to you and understands your personal goals for your property. Contact us at Northeastern Group, LTD to learn more about how we can help you build your future home or improve your existing home with construction loans.

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