There are certain types of properties that require special handling.
Vacant Land:
Select lenders will finance the acquisition of unimproved residentially zoned land. These loans often have a short term and may specify a certain time frame when construction must begin. Some lenders will offer acquisition/construction loans allowing the borrower to acquire the unimproved land and to construct the home.
Construction Loans:
The buyer already owns the land and is going to fund the building of a new primary home that they will live in. (If the land is not already purchased that cost can be folded into the loan amount). The application process is like other loans. However, there will be additional documents include completed drawings and plans for the home. Some lenders will also want to review and approve your builder. There will be an appraisal based on the plans to make determine that the home will have a value that is commensurate with the loan amount and the down payment. While the house is being built, you’ll only need to make interest payments based on the money that you have drawn as the project progresses. The amount you borrow during this phase covers the costs of materials, and labor. The lender will let you know at which milestones they will send an appraiser out again to confirm progress and allow you to draw funds. When the home is complete, and a certificate of occupancy has been granted, the loan is then converted into a permanent
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