Blake MortgageA Story by Damian BrownBlake Mortgage is a residential and commercial mortgage firm based in Scottsdale, Arizona, and has served the Phoenix metropolitan market since 2002.
How to Choose the Right Lender for Your Construction Loan
How to Choose the Right Lender for Your Construction Loan How to Choose the Right Lender for Your Construction Loan Navigating the path of financing your dream home takes time and effort. Thankfully, it feels less overwhelming with guidance on choosing an appropriate lender for a construction loan in Arizona. You’re not
alone in this journey; understanding how to pinpoint that perfect match makes
all the difference at every stage of building or renovating. Know Your
Credit Score
Let’s delve into understanding one crucial aspect: your credit score. This three-digit number proves to be pivotal in securing any loan. A higher score gives you more negotiating power while approaching potential enders for Arizona construction loans. Banks love
working with borrowers with excellent credit standing, which signifies less
risk involved. Remember, each point counts! Regularly monitoring your credit
report allows early detection of errors or discrepancies that could lower your
score. Correct them
by contacting respective repositories: www.experian.com, www.equifax.com, and
www.transunion.com. Maintaining A good payment history in paying off existing
debt, Such as revolving credit cards, mortgages, Installment debt, car
payments, etc., also works wonders in boosting your credit score over time. The rule is simple: understand where you stand before seeking an appropriate financing solution like an Arizona construction loan. Gather
Information About Lenders
To gather
information about potential lenders:
Additionally,
look for transparency in all operations; those lenders who clearly spell out
terms without hidden fees deserve your consideration. Next, focus
on expertise: the lender must understand real estate projects like yours inside
and out. This could ease discussions regarding everything from timelines to
property values post-construction. Remember to
scrutinize financial stability as well. You want assurance that funds will not
dry up mid-project due to sudden setbacks in the company’s fortunes.
Additionally, consider revisiting local banks if they offer construction loans competitively priced against non-bank counterparts. Compare Loan
Rates and Fees
As you look
deeper into your construction loan options, compare rates and fees. This
comparison will give you a clearer picture of what lenders are offering. Many
lending institutions present their rate structures differently, so take the
time to understand each one. Explore each loan option’s features and costs
before making a final decision. Use online
tools for easy comparisons, saving money and stress in the long run. Always
ensure that all these amounts have been factored in before deciding which
lender best suits your needs. Remember,
though: the lowest rate only sometimes means it’s the most beneficial option.
Adjustable-rate loans may initially seem economical, but remember they carry
risks too! Get quotes
from various sources, such as credit unions, banks, or mortgage companies. Understand
Loan Terms and Structure
Understand
the loan structure to get the best out of your construction project. The terms
lenders provide can make a world of difference to your finances. With
construction loans, principal repayment starts after completion, not during
construction. You pay interest-only payments during the construction phase. One crucial
aspect of the construction loan is whether the loan is a “one-time close” or
not. This means that some lenders will lend the money during the construction
phase, only to have you refinance the loan, pay it off, and get into a
permanent 30-year fixed loan After the construction is completed. The latter
scenario puts you in a problem, which is interest-rate risk. You will be
subject to the then effective market rates, which could be higher than the
current interest-only construction loan payments rate. In addition,
the refinance means new origination, discount, Underwriting, appraisal, escrow,
title, recording fees, and so on. You only have
to pay those fees once in a single or a “One-time” close construction loan.
When the construction is completed, and you have the occupancy permit from the
city, the loan flips to a 30-year fixed loan at the same rate as you had with
the interest-only portion of the loan. Check for
Additional Services Provided by the Lender
As you search
for the perfect construction loan lender, look beyond interest rates. Consider
what other services they provide that can streamline your building journey. Some lenders
offer a convenient feature of seamlessly converting a construction loan into a
permanent mortgage at completion. This can be beneficial because it saves time
and reduces the required paperwork. Moreover,
some lenders also provide access to build consultation services that help you
make informed decisions regarding budgeting and material selection when
building your dream home in Arizona. Also, check if prospective companies offer
pre-approval options; knowing the maximum funds available helps shape realistic
plans without jeopardizing financial security. Lastly,
assess their customer service reputation. Prompt responses and clear
explanations are essential for successful transactions throughout a complex
process, such as building a house from the ground up. Consider
Other Factors to Help You Decide
As you
navigate your construction loan journey, other factors can help refine your
choice. Reputation matters; a lender with positive reviews from satisfied
clients offers trustworthiness and credibility. Think about
the long-term relationship, too. Excellent customer service can provide comfort
during stressful times in the process. Accessibility also matters; interacting
with or contacting lenders should be easy to quickly resolve potential issues. Likewise,
consider flexibility; a project might expand, requiring additional funding or
change in some way, affecting repayment terms. How accommodating are they?
Lastly, but certainly not least, expertise! Does this group specialize in
Arizona-based projects? Are they aware of unique regional challenges that may
need addressing? Please take
note these elements don’t directly relate to financial aspects like rates or
fees. Yet, they influence how smoothly things proceed, with fewer headaches!
Remember, money isn’t everything when taking on a project as significant as
building your dream home. Also,
consider their customer service and reputation; responsive support during the
building process can make a difference! Selecting the
right lender for your construction loan should feel manageable. Look for one
with industry expertise, like Blake Mortgage, that offers flexible terms and competitive rates. Transparency is vital. How can we
help?
Click the
button below to make an appointment or call 480-699-1055 You can also
Make an Appointment online. Make an AppointmentYou can also
request a call back or apply online.
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