Saturday, June 2, 2012

Construction Loan Details

We signed our construction loan yesterday.  The loan is for $212,000 and is an interest only loan.  The interest rate is 4.125%.  The payments are due on the first of the month and we only pay interest on the money advanced.  The title company takes care of disbursing all the money and making sure all parties involved sign a lien waiver.  Lien waivers protect the homeowner so that there is a clear title when they are ready to close their permanent mortgage. 

We will roll our construction loan into a permanent mortgage in 3-4 months when our house is done.  I'm hoping that interest rates stay low.  For a 30 year mortgage yesterday, it was 3.5%, almost down to 3.375% for a fixed 30 year mortgage.  Wow!  That is cheap money.  We picked a very good time to build. 

Y and I have been compromising on the house already.  We're going to have a light olive green house with tan trim and a brown roof.  I think it will look really nice. 

If you have any questions on our construction loan, do not hesitate to ask.  I will give you all the details you want.


  1. Sounds like you have indeed picked a good time to build. How exciting!! Good luck with everything and share some photos of the process. I love a good construction site...

  2. I'm looking forward to following the process too!

  3. Your % rate is lower than my Student Loan Interest rate. That's pretty amazing!

  4. I have a couple questions.

    From my understanding, the construction loan will roll into a mortgage, which from my understanding means you technically have a mortgage of $212,000? I'm a little confused, how is the loan different from a mortgage?

    And if I remember correctly, I think you said Y will be doing some of the work himself? How does that work out with the loan?

    It looks like things are going great though and I am happy for you :) I'm actually kind of excited that you've made this step in your life.

  5. I've heard it's common when you build to have to roll the land into the loan, even though you own it outright, so that if the bank has to repo they don't have to pay to have the house moved. Is this true in your case, or will the loan only include the structure?

    Also, are you doing any energy conscientious installations in the new house? I'm not much into all of this "green" stuff but I am into saving money and some of these ideas excite me but I don't know if they would be worth the extra upfront expense.

  6. Church loan is beneficial for construction of new building as well as for reconstruction of new one. Try our lenders because we are expert in this type of finance.