Congratulations on your own wise decision to build and/or contract the construction of your Dream Home! Provided you follow sound construction wisdom and building practices you will find this decision to be one of the very profitable and enjoyable experiences of your life Construction loans
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One of the very vital aspects of the property construction process could be the construction loan and it's structure! During the last 3-5 years Owner Builder Construction Loans attended a considerable ways and inspite of the sub-prime mortgage woes and credit crunch there's still lots of money to be lent to owner builders! From a lenders vantage point, construction loans have which can be a number of the lowest risks, best performing loans for lenders because people who build a home generally LOVE those homes and are prone to live in the house longer than non-Owner built homeowners! So the very first thing you want to understand is that the banks really DO WANT YOUR BUSINESS! (Provided you've good credit and assets!)

Qualifying for a Construction Loan is really not much unique of qualifying for a standard real-estate loan but there are a few additional considerations that you might want to consider about. Such things as the full total cost, the type home of you'll build and whether you can have Builder oversight or not. I strongly declare that at least you pay to have a builder of record who assists and/or manages the construction site, trades and project for you. In addition, you wish to identify and gather all of your income, checking and other financial data so you are ready for the application form process Construction loans
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You can find (2) primary types construction loans:

#1 - Interim Construction Loan - this is a short term loan, that really must be refinanced or paid entirely at the completion of construction. The downside to this specific loan is that the closing costs are higher due because you've two separate closings and they're higher risk because you can't lock the interest rate of your end loan. The primary benefit to an interim construction loan is based on so it allows you to take out (or access the equity and get cash) of the property upon completion. In many states that is accomplished via a home equity distinct credit. I personally only advise accessing this equity when you have had substantial appreciation since the beginning of construction and/or you intend on investing the proceeds into good low-risk cashflow producing real-estate!

#2 - One-time Close Construction Loan - this loan is quickly becoming the industry standard due to the numerous advantages built in to the loan. First of all, this loan doesn't have interest rate risk because you can lock the interest rate the afternoon you're approved and that interest rate could be reserved as far as 1 year ahead of time! (HUGE BENEFIT!) Another major benefit over the Interim Construction Loan is that the One-time Close Loan only has 1 closing so you simply pay closing costs once! When structured properly you can even roll all of your soft costs (soil tests, surveys, engineering & plans) in to the loan rather than paying them ahead of time out of pocket!

Now that individuals understand what the (2) primary options are for financing our Custom Dream Home, let's look at some tips and strategies to be mindful of as you go about planning your project. Now there are numerous Owner Builder Construction Loan programs which will literally lend you the money and let YOU manage/build your own Custom Dream Home without the other builder oversight! (certain states have Builder requirements) Personally I would suggest against building without the builder oversight if you are a creator yourself since the loans that enable this are generally extremely expensive and most don't provide the One Time Close option so you wind up spending several thousand dollars in additional interest and lender costs that might have been saved! I also recommend against this because it's a severe quantity of financial risk and liability to build a home when you have never built a home before!

Listed below are a few other money saving considerations to be mindful of regarding Construction Loans:

Structure your loan so you don't have ANY payments throughout the construction period!
Add the "Float-down" option when locking the interest rate so when rates drop during construction you may get the newest lower rate!
Confirm your building schedule with your builder to ensure that you've enough draws. (draws = check disbursements)
Make sure that you've a survey completed once the home construction has been completed. (the mortgage company will be needing it!)
Always add additional time for you to the interest rate lock period as construction always takes longer than planned!

Any one of many (5) tips above could help you save thousands and tens and thousands of dollars and a team of headaches! I have seen people lose lots of money and time because nobody shared these essential Owner Builder Construction Loan tips! However you on another hand are well-equipped with this specific information but this still only scratches the surface of the full scope of building your Custom Dream Home! In my practice I see people who take some time and invest in their education and I also see those who throw caution to the wind and ignorantly jump in head-first without guidance! Months later, the outcome always seem to show that the cream rises to the most effective and those individuals who have not thoroughly equipped themselves, hired a specialist team of experts and followed their advise seem to possess lackluster results at best and a massive financial catastrophe at worst!