Construction Loan Resources And Requirements
Michalis 'BIG Mike' Kotzakolios

Defined Tag: Construction Loan.

A construction loan is similar to a home loan used for purchasing a house, except that this type of loan is used to build a house, rather than to buy one that already exists. The process of getting a construction loan can be easier by first, gathering the necessary materials and second, looking for alternative loan institutions if your bank is not an option.

Construction loan materials are the applications and plans that are presented as part of a loan request. They are presented to a loan officer in an effort to provide evidence that the requested loan is investment worthy. Construction loan materials include material and labor estimates, blueprints, designs, and drafts of a good building site - one that is out of flood zones, has a good view, and can be easily modified for more building. Home designs, whether purchased or custom designed, along with a contracted price for the building of the home are construction loan materials that banks, in particular, want to see.

Other loan resources however, are an alternative method of securing a loan and are used when a bank is not willing to invest the money. Found from mortgage companies or independent loan officers, these loan alternatives are quicker to obtain as alternative loaners are more willing to make investments that may be considered by banks as too risky. From alternative institutions, you can request a loan that can be applied to your homes' mortgage payments or you can request a hybrid loan from a mortgage company directly. You could also approach an independent loan officer that is not associated with a particular bank or any of its branches.

Once you've found an alternative construction loan source (or your bank if it is still an option), gather up your financial statements, blueprints, lot survey, budget and any other information that you think will help you get the loan. Having these items handy will increase your chances of getting the loan you desire, however you must still give yourself the opportunity to ask about hidden costs or requirements.

Some of the things that you should be aware of concerning hidden costs or requirements for construction loans are additional loan fees, floating rates and land ownership requirements. You might incur additional costs from things like pay points, attorney fees, inspections or appraisals. Sometimes when a construction loan advance is granted, these fees must be repaid upon each grant. And some loan institutions (including banks) won't give you a construction loan unless it's used to purchase an existing home. Even worse, to secure a construction loan in other cases, you might need to own the land that you want to build your new home on prior to winning the grant.

BIG Mike is a well known author, developer and Adsense expert as well as the owner of Niche Maniacs - a unique Adsense Marketing System designed to build long-term passive income streams from Adsense, YPN, Chitika and other PPC services.