Are you wondering can you get VA construction loan? Everyone dreams of having their own home. In today’s world, with the increasing cost of living, it is impossible to save money for investing in a house. Some people like to have new things while some are fine with used things. When it comes to home, people prefer building their own home.
This will enable them to build the house according to their requirements. Getting a loan for construction of your house is recommended. There are various types of loans, but when it comes to Veterans, they have to face many problems.
To get a loan, lenders check the background, credit history, and require complete documents. Since the veterans have a gap in their credit history, lenders are reluctant in providing a loan to them. There is good news for veterans, Jake Taylor offers VA construction loans.
Are you wondering what is VA construction loan? In this article, we have a mentioned everything you need to know about VA loan.
What is VA Construction Loan?
VA construction loan is a type of loan available for a veteran for the construction of their home. As the veterans are deployed in different places, it is impossible for them to save money for construction of their house.
The VA construction loans are short-term loans that enable the borrower to get money for mortgage and construction phase. This means the veterans will get the money for the time their house is been constructed. At the end of the building period, the lender will want their money back.
Types of VA Construction Loan
There are two types of VA construction loans, two close and One-time close. The two close construction loan has a loan application for both phases. This type of loan has two closing dates that make it complicated.
Another VA construction loan is a one-time close loan. It has a single closing date and application. The borrower will be required to get required paperwork ready including builders permit.
What Can You Build Using the VA Loan?
The type of property you can build depends on the lender. There are some lenders who don’t allow the construction of the modular home, manufactured housing, and mobile homes using VA loans. Such lenders provide VA construction loans for a typical house. Moreover, some lenders don’t allow the construction of the multi-unit property. This is why it is recommended to discuss the plans for your property beforehand.
Process of Acquiring Loan
The process of obtaining the VA Loan is divided into phases. The lender hires an inspector to keep a check on the construction of the home.
The lender will review the house plans created by the builder. They will evaluate the final value of the home. The lender will provide the total amount of the loan by setting up milestones. Once the loan is approved you can start the construction of your house. For instance, you need $250,000 for construction of your house. The lender will not hand over the whole amount to the builder.
The builder will provide a construction plan with key milestones. When each building phase is completed, the lender will reimburse a certain percentage of the funds to the builder.
For example, the builder has allocated 20% for the plumbing phase. Once the phase is completed, the lender sends the inspector to check the work. After verifying the project, the lender will send the check of the amount payable.
What is VA Permanent Mortgage?
When the whole construction project is completed, the lender will send the inspector to check the house one last time. If everything is completed properly, the certificate of completion is issued. This certificate indicates that the house is fully complete and is ready for occupancy. It is the time when the lender will their loan back along with interest.
How Much Interest You Should Pay?
There are different requirements when it comes to interest. The interest depends on the lender choice, some lender let the payment be accrued during the building phase while some want to get the payment during the construction phase.
The interest you will have to pay will be on the amount that is issued to the builder and not on the total $250,000. Mostly, the interest rate depends on the credit qualification of the borrower.
Things to Keep in Mind About VA Construction Loan
There are certain things you need to keep in mind, have a look.
- It is a requirement of VA loan that you need to have a licensed and insured builder. The builder must submit their documentation in order to be an approved builder.
- You must ask your loan officer about the extra requirements that you should know about.
- You cannot be an owner and a builder. You will have to check it in the lender standard permit to know more about the participation of the borrowers.
- The builder and borrower are required to submit a complete plan when applying for the VA construction loan.
- The loan process might take 45 to 60 days.
- The builder has to pay the closing costs of the construction. However, who is responsible for these costs can be mentioned in the borrower/builder agreement
- VA loan must be closed before the construction starts.
Therefore, all the veterans in Arizona can get a loan and achieve their dream of owning a house. Jake Taylor offers a wonderful opportunity to build the house of your dreams. Since VA construction loans are in the deep end of the mortgage pool, you must ensure you work with an experienced and skilled professional. This is because it will be challenging for an average person to understand the program. A professional will have comprehensive knowledge of the program and will guide you properly. If you want to get more information about the VA loans, kindly get in touch with our experts. We are here to help guide you through the whole process.