Construction loan: inside secrets to building your new home

What experience does your construction loan officer have and does it matter?

When it comes to money it’s amazing how tightly any loan officer becomes an instant expert at construction loans. You must keep in mind that all loan officers are salespeople. Yes, I be versed they have fancy titles like loan officer or vice president but the title is nothing but a fancy name for loan sales-clerk.

Loan salespeople usually have one main goal in mind when helping you with your loan request and that is the commission. By the way, the guess name for commission in the loan business is called a loan fee, points or yield spread premium (YSP).

Now don’t get me unsuitable, there are a lot of good honest sales people (loan officers) that work very hard at providing you the best usefulness and rates. What’s important is distinguishing the good from the bad.

The following questions allow you to quickly find out if your loan lawman is experienced at construction loans.

1. How long have you been doing construction loans? 5 years or more is to the fullest extent.

2. What is the loan to cost (LTC) required for construction loans? This is cash equity such as down payment on land. This can extent from 5 to 20%.

3. What is better? The voucher or draw disbursement system and why? Draw is now the most popular because the customer has the control of the money.

If the credit officer (sales person) can answer these questions with no problem then they have passed a pretty good litmus prove.

If you really want to throw a curve at them, ask the loan officer if they have ever built a home themselves and what type of construction advance did they get.

If you find a loan officer that has gone through the experience of building a home themselves then the odds are you have found an experienced loan public servant.

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