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Understanding New Hampshire Construction Loans

Understanding New Hampshire Construction Loans

People who want to build a home often mistakenly assume that they should use a mortgage for this purpose. That is not the case, however. You can only actually have a mortgage when there is already a home that can be used to secure it. In a situation where you are still planning to build, you should instead be looking at new hampshire construction loans.

This kind of loan is specifically designed to meet the needs of people who are trying to put up a new building. You will have to share information with the bank about what property is going to be used and how it is going to be built. You may even end up using the land as collateral to help you get the money that you need.

This variety of lending is designed to be a comparatively short-term arrangement. It is only supposed to last over the course of the construction project itself. What home owners often choose to do is make arrangements to get one that will automatically turn into a mortgage upon the completion of the building process. When the certificate of occupancy is issued for the house, the house itself is available to secure a mortgage. The interest rate can be set either before building or afterward, depending on the details of the agreement. This is a relatively simple arrangement to use from the perspective of the home owner, because there is only one loan application and one closing process.

You have to make sure that you understand clearly how the money in the loan is going to be disbursed, because it usually does not happen all at once. Instead, you draw money out over time in order to pay the builders and cover the cost of materials. The exact rules for how you make arrangements to get a portion of the money will vary among lenders, so make sure that you understand what you will need to do.

Building your own home allows you to get the house of your dreams, down to the tiniest detail. Look into your options regarding construction loans to see if they could help you to get the money necessary to make your dreams come true.