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Building Your Dream Home<br />
This section has been prepared with the assistance of Eli Lewenstein of Sterling Construction<br />
and Chanie Kamenetsky of CK Designs.<br />
Financing A construction project<br />
For home building, some lenders offer a special product known as a construction<br />
loan. Because construction of a new house is higher risk to the<br />
lender than mortgaging an existing home, these loans typically have tight<br />
standards, with requirements for impeccable credit scores and strict underwriting<br />
criteria. For this reason, it often pays to seek a lender with experience<br />
in securing these types of loans.<br />
Usually, construction loans are short-term loans in which the funds are<br />
released in stages, or “draws”, at different points in the construction process—for<br />
example, before laying the foundation, before framing, etc. Once<br />
the construction is complete, they roll over into conventional mortgages with<br />
the house as collateral. During the construction stage, the interest is usually<br />
structured as “prime-plus”, which is the prime rate (the rate charged by banks<br />
to their preferred customers) plus a set amount; once the house is built, the<br />
loan becomes a standard mortgage with a lower rate.<br />
WE ARE COOPERATIVE. We work closely with<br />
attorneys, lenders and most major underwriters<br />
to expedite processes and solve problems.<br />
732.905.9400 • WWW.MADISONTITLE.COM<br />
2017 Lakewood Home Buyer’s Guide | 75
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