Financing Options For Glulam Home Construction
Home construction financing options abound. Some lenders specialize in this form of lending while local banks may also be good resources.
Before providing a loan, lenders carefully evaluate plans, budget and schedule before issuing it. Funds disbursed during construction are dispersed on an as-needed basis via on-site inspections to track progress; upon completion, most loans convert to permanent mortgages with monthly principal and interest payments.
1. Home Equity Line of Credit (HELOC)
Renovation projects can be an excellent way to increase both the value and functionality of your home, but financing them may prove challenging. Here are two popular funding options: home equity lines of credit (HELOCs) and construction loans.
HELOCs and home equity loans allow homeowners to tap the equity they’ve built up by paying off their existing mortgage, using loan-to-value ratio and home market value minus outstanding mortgage balances as criteria to calculate available equity. Both products also come with flexible terms to accommodate whatever use you might have for their funds.
As a homeowner with a HELOC, your lender will set you a credit limit that could exceed or fall below your home equity amount. When funds for renovation are needed, draw against this credit limit as needed from this limit during its draw period, paying only interest on money borrowed during this time. Once this ends, repayment begins which could last 10-20 years depending on your lender and requires regular payments that include both principal and interest.
As much as HELOCs can be useful for renovations and other smaller expenses, it is important to remember that qualifying requires having an adequate credit score. A low score could result in being denied or receiving higher-than-expected rates when applying, so prior to applying, work on raising it. If you need help raising it or increasing it further, contact an expert on improving it and receive optimal advice to maximize your potential and get the best rate available to you on loans or lines of credit.
Peoples Security Bank & Trust can help you find the perfect financing solution for your major remodel, with competitive rates on HELOCs and home equity loans as well as flexible terms to suit any renovation requirements. Apply online now, or give us a call now so we can discuss all the available financing solutions!
2. Construction Loan
Construction loans provide financing that specifically covers the costs associated with home building, typically on a shorter-than-usual timeline than mortgages and usually only paying interest during construction phase. There are various types of construction loans designed to fit different projects and borrowers; many convert automatically into mortgages once completed – perfect for people who prefer not going through two rounds of mortgage application procedures and closing costs!
To qualify for a construction loan, you will need to meet similar criteria as when applying for a mortgage loan: an excellent credit score and income, low debt-to-income ratio and down payment that may differ depending on the lender. Lenders also typically want evidence of your contract with an authorized and reliable builder as well as pricing/planning information and details pertaining to your home project – references from past builders are sometimes necessary as proof of credentials for contractors who provide these types of services.
Once the construction of your home is complete, lenders will conduct a final inspection to make sure that it satisfies all standards and quality requirements. Once approved by an inspector, title to the property will be transferred back to you and your construction loan converted into a permanent mortgage loan. There are various home construction loan options available such as private lenders, banks, credit unions and online lenders as well as government-backed programs like an FHA construction loan for eligible veterans or a VA construction loan for homebuyers.
While these loans provide unique advantages, borrowers should exercise extreme care when making their decision to ensure they can meet all repayment obligations and manage any potential delays or cost overruns that might affect their ability to meet repayment obligations. Planning ahead, interviewing builders carefully, and having enough savings set aside for living expenses during construction period can all help mitigate risk.
3. Construction to Permanent Loan
Traditional home construction financing entails two sets of fees and fees: construction-to-permanent loans combine them all into one loan package to save time and money while getting pre-approved for conventional mortgages at once, rather than waiting until after building is finished to shop around for one.
Construction-to-permanent mortgage loans provide funds in stages, tied to specific milestones in the build process such as foundation, framing and drywall installation. When builders reach each milestone they submit documentation to their lender for approval before drawing more funds. Lenders may even visit job sites periodically to monitor progress being made towards meeting borrowing limits or completion. Once either milestone has been met or its borrowing limit reached automatically converts into a permanent mortgage with interest and principal payments accruing simultaneously.
As with a regular mortgage loan, construction-to-permanent financing requires extensive documentation, including blueprints, budgets and contractor licenses. Furthermore, lenders may impose restrictions such as using only approved contractors – this can limit choices while adding time and stress to the process.
Additional challenges include high upfront costs, limited construction timeframe and uncertainty around mortgage interest rates as the final rate won’t be set until after completion. Another issue to keep in mind is having two sets of closing fees which can significantly increase overall financing costs.
TD Bank offers construction-to-permanent loans to buyers looking to construct or renovate single-family, stick-built or modular primary residences, as well as purchasing land for custom home builds or renovating an existing single family dwelling. A minimum credit score of 700 is necessary in order to qualify for this program, which can be found across 15 East Coast states as well as Washington D.C. Citizens Bank also offers similar construction-to-permanent loans available both new and existing homes with 20% down payments that allow up to 85% borrowing limits of total home costs.
4. Mortgage
Glulam is one of the strongest materials available, making it perfect for creating open spaces or cantilevers that reach into the sky. Due to its lightweight structure, glulam allows designers to achieve designs without hidden steel elements that would normally need reinforcement for ambitious spaces or designs – giving a cleaner finish while simultaneously saving costs.
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Wood’s natural properties make glulam an excellent material for both exposed and concealed applications, including architectural and interior design projects. Glulam can be easily formed into curvier shapes than can be created using solid timbers; giving architects and designers freedom to craft truly distinctive spaces for their projects.
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While glulam framing technology has long been utilized in Europe, its first introduction into American construction took place with the creation of a school and community gym in Peshtigo, Wisconsin in 1934. Since then, glulam framing has been utilized on projects ranging from bridges and commercial buildings to homes and barns.
Gulam timber has long been valued for its strength, versatility and aesthetic beauty; this quality makes it the material of choice in contemporary buildings. Carpenter Oak has participated in some exciting glulam projects such as Manor House Extension’s modern take on traditional black oak barn design; Greywings features floor to ceiling glazing with dramatic cantilevers; as well as many others.