Construction loans can help you build a custom dwelling. That can mean a lot of things to your family. There’s a sense of satisfaction and accomplishment. Of course, you get to live in the home of your dreams too.
However, putting together the finances for the whole process can be overwhelming.
Here are a few of the things you need to know about the construction mortgage process.
The Draw Term
- There are two parts to consider. The first aspect is called the draw term. It comes during the initial construction phase and allows people to pay for trades, suppliers, and contractors as well as the builder. You’ll get the money released to you at various stages of the construction process. It’s important to have a worksheet or budget that shows the timing requirements and projected cash needed. This will illustrate when the money is available and when it’s going out and whom it’s being paid to. A template is a good idea.
- It’s important to keep in mind as the borrower you won’t get the money in advance. However, you can get a separate loan to purchase the lot.
Get in touch with us today to learn more about the draw formula and how the money flows from it.
The second stage for these types of construction loans is called a completion mortgage or end term. That is usually a normal mortgage that gets activated after the construction is complete.
OMJ Mortgage Capital can help you with construction loans to build a dream home or other facility. Take a few minutes to look at the different awards we’ve won including Commercial Mortgage Broker of the Year Finalist. Then get in touch with us so we can help you get the right commercial mortgage. We are looking forward to hearing from you.
