Owner Builder Construction Loans

Owner builder construction loans are available for the do-it-yourselfer who believes they can build their own home for less than a general contractor. Indeed, records have shown that builders usually finish most jobs for a minimum of 20% less. There are several factors that owner builder construction loans are based on that make them more efficient for the person building their own home. Before applying for such financing, though, the builder should consider if this is the option that will result in the highest quality home. "He buildeth his house as a moth, and as a booth that the keeper maketh" (Job 27:18).
This type of lending is financed at an excellent rate comparable with other home loans. They are set up for a six to 12 month term which is the amount of time needed to build a home. They are usually for new building projects, but if an owner has already begun building and runs out of capital, an owner builder construction loan can be arranged to finish the job. Lending that is needed for additions or reconstruction can also be made that include the first mortgage by replacing it.
Interest paid is for only the portion of the funds that is disbursed, which at the beginning, would be only the refinanced first mortgage. As construction progresses and sub-contractor suppliers are paid, the newly dispersed funds will be included on the finance charge calculation. Suppliers that are paid by disbursed owner builder construction loan funds include electricians, plumbers, architects, lumber, heat and air contractors, and every other needed supplier for completing the building.
When the building is complete, the contract is complete. However, repaying an owner builder construction loan must still be financed and there are options of how to do so. Some are set up to "roll-over" into a mortgage automatically at completion of building. Another option is an interim loan that is called a "takeout." This takeout has its own appraisal and fees but some lenders of owner builder construction loans claim it has benefits that outweigh a rollover. Interims are supposed to be quicker, easier to qualify for, and have better long-term rates than rollover mortgages. Interest reserve accounts and contingency fees are also not required for takeout.
Some lenders provide workshops that include classes to the potential owner before they take on financing or while they are in the process. These classes will assist them in managing their owner builder construction loan in a way to spend less thereby allowing purchases of additional construction desires that were not originally thought possible. The classes also provide instruction on various types of building projects to get the builder knowledgeable on projects they thought they would have to sub-contract. These classes are a great way to save more money on borrowing, making them an even better investment.
For more information: http://www.christianet.com/onlineloans