Home construction loans are loans aimed at helping a family build a house when they don’t have enough money to do so. It is the dream of many families to get rid of monthly rent payments and have a house of their own. Home construction loans can fulfill this dream; however, borrowers should be very careful about their aims and choices.

The first thing to consider is the size of the budget that the family intends to spend on the new house. When money comes all at once, it is easy to ask for something that you cannot normally afford. This can be a trick for many families who dream of owning a house that is better than their economic capacity allows them to. Moreover, some families fall into the trap of planning for things that they do not currently need (a garage, more rooms for kids that will potentially be born, and the like.). Those two aspects can raise the loan dramatically, and there are countless cases where families struggle to pay back what they owe.

Another thing to consider is whether or not the family will be able to pay back the entire loan in the timeframe that the loan agreement specified. The problem here is not the initial amount that the borrower has asked for, but mostly the extra interest that needs to be paid to the lender. As time passes, pressure becomes even higher, and if the borrower doesn’t manage to escape from the situation, then he ends up loosing everything or paying many times the initial amount.

Finally, the family should consider whether or not it might be better for them to take the loan at a later time. A typical example would be to take the loan as soon as both parents have secured a job or as soon as they are provided with economic assistance from a non-profit source.

By: Kevin Stith

Although having the exact home you want is an outstanding benefit, financing home construction can be a different matter. If you’re working with a custom builder, you will need to assume something known as a “construction loan”. This is the loan that pays off the builder while they build your home. Construction loans are typically short term loans that pack a higher interest rate than your traditional mortgage.

If you’re purchasing a starter home, this might thankfully not apply to you. Builders of “starter homes” understand that a lot of their potential buyers are not able to qualify for a high rate construction loan nor do they understand or care to acquire a short term loan then a long term loan. For this reason, entry-level homes are frequently financed by the builder or else the builder merely builds the homes out of pocket, handling the lot and all of the construction costs of the house. If this is the case with your builder, you will need nothing more than a traditional loan.

If it does turn out that you will require home construction financing, it definitely pays to browse around for best rates and lender with which to obtain one. As construction loans are generally fixed at a higher rate than conventional home loans, you’ll want to pay off the construction loan as promptly as possible.

Some banks will offer you a package deal called a “combination c and p” loan with just one set of closing costs. This makes up both a construction loan and a conventional mortgage loan wrapped up in to one. A combination C&P loan will save you time and hassle in the long run.

Traditionally, a construction loan works as follows. You apply through a lender for a construction loan secured by the home that is being built. Because the home is not yet built, the lender is taking on additional risk by financing you and this will be reflected in your rates.

As the house is constructed, the builder will ask for a “draw” or percentage of the cost based upon the level of completion of the home. This will come about at several stages during the construction of your new home. The bank that’s financing your construction loan will compensate the builder for these draws and construction will progress to the next stage.

Around thirty days prior to the home being completed, you will want to apply for a traditional mortgage subject to the house being complete. This way, the construction loan is paid back and the permanent financing is put in place as quickly as possible after the house is built.

By: Josh Spaulding

With the popularity of “green” products on the rise and the trend not looking to slow down anytime soon, construction products and building techniques that are friendly to the environment are seeing a rapid rise in sales. Let’s look at some of the green trends in construction:

From The Ground Up

Green practices can be incorporated from the very beginning of the building process. From the concrete. masonry, beams, doors, windows, mechanical and electrical systems, moisture and heat protection, finishes, appliances, pretty much for any aspect of building, there are green options and choices that can be made.

Flooring

There are many green types of flooring now available. Wood flooring made from wood that has been taken from old or disused buildings has gained more popularity, since this is a smart way to recycle. For new flooring products, green builders can now choose from green choices like cork, rubber and bamboo. New linoleum products are also now available that can be recycled and are less toxic than their predecessors.

Carpet

Carpets are now available that are recyclable, use little or no toxic materials in manufacturing and are also lower in cost. Carpet tiles are a very green choice and are extremely easy to install and replace.

Goals Of Green Building

The main goal of green building is not just to be more friendly to the environment, but also be a healthier place to live for the home’s occupants. In every aspect of a green home, non toxic or less toxic materials are employed. Green homes will also blend in better with their surroundings and use much less energy and water.

Advantages

There are many advantages to building and living in a green home. While there may be a bit more upfront cost, over the life of the home, the savings on energy costs alone would more than make up for any upfront costs. More cost savings will arise from energy efficiency, water efficiency, landscaping efficiency and materials efficiency. Also, for very sensitive homeowners, a green home will have used much less toxic or chemical based materials, making a green home much safer and healthier for the owner.

Green Remodeling Trends

Not only is green home construction a hot area, green remodeling has also come to the forefront. Existing homeowners can now incorporate green building practices and materials when they are remodeling their homes. For example, in a typical kitchen remodel, the appliances are all replaced. In the case of a green home remodel, the appliances would all be replaced with energy star efficient appliances. Thus saving energy and money at the same time. In the case of a bathroom remodel, simply replacing a toilet with a newer model toilet will save several gallons of water for each flush, which adds up to a significant water savings over time.

Whether you choose to use green practices to build or remodel for cost savings or environmental reasons, it’s certain that green building is a trend that will only continue to grow.

By: Lydia Quinn