What is a Construction Loan?
A construction loan is a short-term loan meant for real estate development. With this loan, you can buy land, build on a property you already own, and if the land has existing structures, you can use some of the funds to renovate. Just like with a line of credit, you only borrow what you need when you need it, and you’ll only be required to pay interest on the exact amount borrowed. With a construction loan from Blackhawk Bank, you can secure funding for the whole project which means fewer closing costs and less paperwork.
You can use the low-interest funds for just about any part of your project including purchasing the land, laying the foundation, framing and finishing. Once you’ve completed the construction, the loan becomes a traditional mortgage. Extended lock options are available on your permanent financing.
How to Get a Construction Loan
The first step should be to talk to your Blackhawk Bank Mortgage Planner. He or she will help you determine the amount you may borrow.
You must provide your basic income, asset and debt information. Construction loans are unique because your construction plans will also need to be approved. So, you should have a signed purchase or construction contract with your developer or builder. This contract will feature certain aspects that will impact your loans, such as the construction start and completion dates and the contract amount, which includes the cost of the land purchase and construction. Your Mortgage Planner will advise on other necessary information.
Additional construction loan details include:
- The land purchase is the first payout on the construction loan, thus paid for at closing
- To reduce interest expense, funds from your down payment will be used prior to accessing the funds of the construction loan
- All payouts will be made through a title company
- All projects must utilize an established Building Contractor
Land Loans
Once you’ve found that ideal ‘forever’ place, you can’t help but picture where your home will be and where the kids will play. We understand! So, don’t let that opportunity slip past; take advantage of our unique land loan and let us help you build the home of your dreams. It all starts with finding the perfect location and as you prepare for the construction, let us take care of the land financing. If the construction of your residential home on the property is imminent, your land loan can be a part of the construction loan.
At Blackhawk Bank, we structure our construction loans to meet the specific needs of our clients. We offer variable rate construction loans at low-interest rates. We also pride ourselves on convenience, which means you have many options when it comes to applying for your loan. Contact one of our Mortgage Lenders to get started, today.