Bad credit construction loans
Are you looking forward to build your house rather than buy one and wondering where to arrange finance? Well, before you start looking for a finance to construct your house you should check your credit report.In case you find that your credit is impaired still you can have a possibility of qualifying for these loans in the form of bad credit construction loans.
There are a number of construction loan lenders who would be interested in giving out these loans according to your requirements.Contrary to the private lenders you would see that the banks do not provide these loans readily to people with bad credit because of the risk involved in lending.Moreover, if they approve you also they would associate the loan with a number of additional costs and conditions.
The rates associated with these loans are ideally based on the market trend, the mortgage sales and the reputation of the lenders. Let us see the features of these loans and what are the conditions applicable.
Features associated with these loans
When considering applying for these loans you should keep in mind that you would have to pay a down payment up to 3% to 5% of the total cost of construction to get approved.There are many lenders that approve these loans with a down payment lower than 5%.However you should make sure that you have enough amount ready to make one.
The bad credit construction loans are given out in stages. These loans are divided into different parts depending on the progress of the construction. At times the lenders set up a line of credit and you can withdraw money as and when required according to the needs of the construction.Besides, some lenders can also offer monthly installments on the construction loans.
Before you apply for these bad credit construction loans it is important to have an approved residential mortgage so that the construction can start.Besides this you can also opt for a stated income construction loan where the loan is approved without verification of your income.
What should you consider?
When you take a bad credit construction loan the lender would definitely be interested in knowing where do you plan to take the plot and what are the plans for the construction.The lender would also like to know whether you already own the land or are considering purchasing it.
In case you are still considering the purchase then you can apply for a loan amount that would cover both the land cost and the construction cost.Besides this the lender is also interested in knowing whether the constructed house would be primary or secondary residence.The lenders are also interested in knowing about the contractor who would be taking up the construction of your house.
Before you approach the lender it is important that you have all the tentative costs ready so that you can explain to the lender about the construction and the total cost involved with it.
Types of bad credit construction loans
The bad credit construction loan can be of different types. Some of these are mentioned below.
The all in one construction loan: This type of loan is a roll over loan, which means that when the construction is complete the loan becomes a conventional mortgage loan.This type of loan has a simple application process. Moreover the costs like the title search, processing fee and the mortgage recording are to be paid just once.But, since you have bad credit you might be charged a higher interest on these loans.
Construction only Loan: These loans are to be paid when the construction is complete. When the construction gets over then the lender decides whether the loan should be paid off as it is or should be changed into a conventional mortgage.
The construction loans are ideally to be paid off at different stages of the construction. Some of the stages including the making of the foundation, framing of the house, wiring installation and plumbing, completion of the exterior, installation of woodwork, interior finishing etc.
Application process for these loans
When you are applying for bad credit construction loans you are supposed to provide the lender with the following details:
- In case employed then income details with details about the employer .Keep your pay check and bonus information ready
- List of all your assets along with the value if possible
- Details about your personal information like social security number, present address, telephone number and other details .
- Details about the plot where the construction has to take place.
When applying for these loans you can find a number of lenders ready to assist you. However, before you apply make sure that you have all the details about the interest rates applicable and the other costs associated with the loan.Also make sure that you have compared different offers before applying for these loans.
Some of the lenders that give out these loans are mentioned below.
I Mortgage Central:
They offer construction loans to people with credit problems. You can contact them at Phone: 1.877.805.4408 x703 or fill out their online contact form for more details.
Florida Mortgage Corp:
They offer bad credit construction loans. Contact them at 2420 Enterprise Rd., Suite# 105, Clearwater FL 33763 ; phone: 727-791-8800, toll free: 888-825-6300.
California Construction Loans:
They offer stated income, no documentation construction loans. You can contact them at 3940 Hancock Street, Suite 219 San Diego, CA 92110 ; Phone: (619) 222-1059 Fax: (866) 231-7303.
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