Construction Financing Mortgages
So you want to build your dream home and need the funds for construction financing. You can apply for a construction draw mortgage where you receive funds at various stages during the completion of your project. As each project is unique, so will its financing solution. Please be prepared to answer these questions:
- Do you need financing to purchase the property, as well as the construction? Or do you currently own the property and requiring financing for a major renovation?
- What is the current value of your property?
- Are there existing mortgages, loans or home equity line of credits registered on the property?
- How much is the construction cost? Do you have the construction plans and estimates? Is this a self-build or contractor?
- Do you have savings to get you started on the construction?
Before you put shovel to ground, contact me to review your construction financing. The financing approval process can take 2 – 4 weeks.
Financing for home renovations
With interest rates on mortgages currently lower than other sources of credit, coupled with the increase in home values, it makes more sense to use the equity built up in your home to fund improvements to it.
If your mortgage balance is less than 80% of your property value, then you can do a simple refinance up to that 80% level. For example, if you have a house worth $800,000 and a mortgage balance of $500,000, you can refinance to take out an additional $140,000, giving you a new mortgage balance of $640,000 (80% of that $800,000 value). You can either apply for a new mortgage or a home equity line of credit.