As a real estate agent, you play a critical role in helping your clients achieve their dream of owning a custom-built home. However, obtaining a construction loan can be a complex and intimidating process, and it’s important to have as much information as possible to help your clients make informed decisions. In this article, we’ll walk you through the process of obtaining a Construction Loan Estimate, why it’s important, and how you can use it to help your clients achieve their goals.
What is a Construction Loan?
A construction loan is a specialized mortgage loan that is designed to help finance various types of construction projects. Unlike traditional mortgage loans, the loan and appraisal for a construction loan are based on the completed project. If you are purchasing a property and plan to do the construction work yourself, the loan amount will be based on the total cost of the land and construction, as well as the appraisal of the completed project.
Why Construction Loan Estimates Are Important
Construction Loan Estimates are important because they give you an estimate of how much the loan will cost you in the long run. Understanding the importance of Construction Loan Estimates will allow you to use this information to help your clients make informed decisions. These estimates are used to help determine how much a project will cost, what the interest rate will be, and what the monthly payments will be.
How to Obtain a Construction Loan Estimate
The process of obtaining a Construction Loan Estimate is not much different from a “regular loan”. There are a few additional items that are needed that relate to the construction project and appraisal, but the process and qualifications are very similar. After the plans and budget for the construction project are finalized, an appraisal can be ordered. It’s important to note that the appraisal process for a new construction loan typically takes longer, usually around 15 to 20 days. Once the appraisal report is complete, the client will usually receive a conditional loan approval subject to the appraisal and a few minor requirements. Once these conditions are satisfied, the closing can be scheduled.
The Role of Real Estate Agents in Obtaining Construction Loan Estimates
As a real estate agent, you play a critical role in helping your clients obtain Construction Loan Estimates. You can use your expertise to help guide your clients through the loan estimation process and ensure they have a successful home-building experience. Your role in obtaining Construction Loan Estimates for your clients is to help them understand the importance of the estimates, assist in obtaining the necessary documents, and guide them through the loan process.
Tips for Real Estate Agents to Help Clients with Construction Loan Estimates
To help your clients with Construction Loan Estimates, it’s important to keep the following tips in mind:
- Make sure your clients have a complete set of plans and a detailed construction budget before they apply for the loan.
- Educate your clients about the importance of maintaining a balanced budget during the construction process.
- Encourage your clients to give themselves extra time in the property contract to get approval and close on the construction loan.
- Work with your clients to ensure they have the necessary documents ready to expedite the loan process.
The first step in obtaining a construction loan is to have an initial conversation with a loan officer. During this call, the loan officer will provide an overview of the loan program and how it applies to your specific project. By the end of the conversation, you should have a solid understanding of how the loan program works, the estimated closing costs, the payment structure during and after the construction phase, and the next steps in the loan process.
Construction Loan Estimates for Real Estate Agents and Clients
Obtaining a Construction Loan Estimate is an important step in the process of building a custom home. As a real estate agent, you can use your expertise to help guide your clients through the loan estimation process and ensure they have a successful home-building experience. At Ed Currie, we offer a wide range of loan programs, including construction loans, to help your clients achieve their dreams of homeownership. Contact us today to learn more about our loan programs and how we can help you and your clients. With our knowledgeable and experienced team, we can help make the loan process as smooth and stress-free as possible.