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Financing
Financing Overview
Financing the construction of a Phoenix Building Solutions home is essentially the same as it is for building a new house on-site. If you were buying an existing home, you would just apply for a mortgage. If you were building a new home, you would probably need a construction loan.
Construction Loans
A construction loan provides the funds for the builder to purchase the materials and hire the labor to build the house. A draw request is made each time funds are needed from the bank under the construction loan. A construction loan is a short-term loan, generally in the range of several months that operates somewhat like a home equity line in that you only pay interest on the portion of the amount that's been drawn down.
For example, if you have a $100,000 construction loan and at the end of the first month, you were to only use $20,000 of it, the loan payment would be calculated on the $20,000 outstanding until the next draw.
Conversion to a Traditional Mortgage
After the house is finished, you can convert the construction loan to a traditional mortgage.
Similarities
Similar to a construction loan for any new construction, you would need evidence of ownership of the land, a purchase agreement with the builder and a set of plans and specifications for the house, to obtain a construction loan for a Phoenix Building Solutions home.
Differences
The primary difference between traditional construction loans and a construction loans for a Phoenix Building Solutions home is the length of the term and the number of draws – one draw for 10% of the purchase price is paid to Phoenix Building Solutions with your order and a second draw for 90% is paid to Phoenix Building Solutions on or before the day your new home is delivered and assembled. With tradition new home construction, there are numerous draws - which means more paperwork for you.
Also, with traditional construction, your loan might be outstanding for six to 12 months. With Phoenix Building Solutions, your construction loan might be outstanding for three to four months. Usually, that means you pay less interest during the construction period.
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