I am going to build a house... Any tips about construction loans?
Answers:
What state? Some states, a bank won't issue a loan if you aren't a liscensed contractor. Also, are you building the house for yourself or on spec? It's getting harder and harder to get a loan to build a spec home. (Spec, means speculation. It means you're building it with hopes of selling it for a profit, as opposed to a presold home, or a personal home.) What experience do you have in the construction trades? I can't tell you much about what questions to ask the bank other than "Can I have some money?", but I can give you all kinds of questions to ask yourself, that the bank IS going to ask you. Can you give any guarantee that the work will be done proficiently? How? Will you have an engineer do periodic inspections? Will you have an engineer available to answer technical questions that may arise during construction? Do you have a working relationship with the construction and mechanical trades that will be involved with your construction? Are you going to personally supervise the construction, or are you going to hire a jobsite superintendant to do it for you, or assist you? As for the loan, they are very straight forward. The bank will set the loan up to release money upon completion levels( or Draws) for each specific trade as work progresses, and for materials. But you have to be on your toes. If you've paid your carpenter 1/3 for the first floor, and 1/3 for the second floor, and he messes up your rafters to the point that you have to get another crew to finish (talking from experience here) then you just went THOUSANDS of dollars over budget. So you need tto ensure, both to yourself and the bank, that someone with the knowledge will be on site at ALL TIMES to avoid such setbacks.
Other answers:
Shop around - there is competition in the money lending business
Shop around - there is competition in the money lending business