The Truth About Construction Loans

With the housing market creating buying frenzies in some local markets, people are considering building new versus purchasing. Many people have been scared off in the past by incorrect information or myths about the downsides of building loans. Let’s bust some of those myths using the help of a friend with 45 years in the financial world who works at Olympia Federal Savings (OlyFed), Barbara Whitlow.

To begin with, construction loans with OlyFed are designed to meet your financial needs, so there is no reason to be afraid of one. Whitlow suggests you begin the process by determining your budget with the help of one of the knowledgeable loan officers at OlyFed. They will help get you pre-qualified and determine what an entire realistic budget for your project should be.

Next, it is not necessary to buy the land and pre-buy house plans or other things as some people suggest. Save your money for a larger down payment. The great people at OlyFed will roll all the expenses from beginning to end into one loan and you may not have to sell your current house first.

Called “One Step Financing,” OlyFed is one of the few banks that rolls construction costs and permanent financing into one convenient package. They close up-front on the permanent financing so there is no need to refinance upon the completion of your new home. You avoid paying additional closing costs or running the risk of interest rates being higher than when you started.

Throughout the construction process, you or your builder can utilize a program called BUILT to assist in securing construction draws against your loan. BUILT helps to manage risk, maximize productivity of the builder, and improves the draw process.

Did someone tell you that you could save a lot of money serving as your own general contractor? Whitlow would advise you to use a great local builder because it saves you money in the end. Whitlow said, “They really can save you from making costly mistakes as well as the time wasted to re-do an error.”

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