Construction Loan, yes? No?

This week we have talked about:

  • What the bank wants/needs
  • Types of Income
  • Credit scores

Once you have worked your way through all that plus a zillion other documents and mountains of paper work the bank will eventually either deny your application or it will promise to loan you the necessary money.

The next step in the process is your Closing at The Bank. The Bank, you, your attorney, and perhaps others will attend the closing where everything is signed and made officially final.  Some of the things you will need to know:

  1. Truth in Lending Act  (TILA) – the government (1968) passed a law designed for consumers to use, it will require the bank to show you exactly how much all of the various pieces and parts of your loan will cost.
    1. Suggestion – we suggest you do your research and read as much as possible about the specifics of this law, it is there to protect you and it is information you should know!  Yes, it is important.
    2. Right of Rescission – Very important.  The TILA requires that every consumer be given three business days within which they have every right to rescind the contract and are guaranteed that all of their monies will be refunded.  Unfortunately, many people are subjected to High Pressure Sales and sign for things they later regret.  The law allows you a three-day escape window.
  2. Construction Loan – if you are building a new home (hopefully from Vermont Modular) your loan is actually a Construction Loan or more accurately a Line of Credit that you now have to pay for all of the various bills that will come due as you are building your new home.
  3. Construction Loans typically have a specified length of time before the project must be done.  This can vary from a few months to a year
  4. Mortgage  -  at the end of your construction loan that loan rolls over and becomes a conventional mortgage.  Each lender has their own rules and regulations.

Tomorrow we will take a look at some of the larger parts of a mortgage.

Do you find this interesting?  Call us at (802) 985-5855

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