Get the construction loan in your name.

Often you can get a construction loan that will morph into a mortgage loan with the same lender. This can be convenient and should save you a few dollars. A bank like First Texas does a lot of construction loans. They know most local builders and can bail you out if something happens to your builder. Emergencies happen. Dan Amon likes to use First Texas Bank. They have been serving Georgetown since 1898. They know Georgetown and they know Dan Amon. They are ready to give you the loan once you produce plans, specs, a budget generated by the plans and specs, and a signed contract from Daniel Amon Custom Homes.

There are considerable advantages with using a local bank. Construction loan dos and don'ts Wherever you decide to get your loan, you will need to provide the lender with plans, specs (specifications) and a budget generated by the plans and specs. To prepare the specs and generate the budget, the builder must be included. You can get pre qualified for the loan based on the budget generated and the appraised value of your new home. However, you will not get the financing until a contract with a reputable builder is signed. The construction loan is more about who controls the money than about annual percentage rate (APR). You need to control the money. You need to pay the subcontractors and materials suppliers. This usually requires a signature of both you and the lender. It is common for the lender to sign off on all work and send checks for materials and subcontractors based on a percentage of work done. For example, if 25% of the roof is complete, the builder will pay for 25% of the money allocated for roofing. If this method is used, it is important that the lender in charge of paying your account is extremely familiar with residential construction and is prepared to make thorough inspections before writing any checks. At a minimum, you should get veto power over paying for any construction you feel is inferior.Builders like to have the construction loan in their name. Never do this. They are able to pay themselves for work not completed, short their subcontractors and get a lien put on your new house, and deplete your funds before the house is completed. You are left with an incomplete house, your housing money spent, and hopefully, no builder. The reason I say hopefully is, if he burned you once, he will burn you again.