What to Know About Residential Home Construction Loans in 2022
Updated: Feb 17
Jumping headfirst into a new year often comes with big plans. If your goals for 2022 involve purchasing real estate, you may find that the market is looking a little flooded with buyers - and this could present some challenges. For the first time, you may find yourself looking into construction loans - and wondering if it may be the best option for you.
Whether you are looking for commercial or residential real estate, here’s what to know about construction loans in 2022.
What is a Construction Loan?
On the surface, construction loans can seem a little unfamiliar, making the process a little overwhelming. However, once you gain an idea of how they work - and find an experienced title team to walk you through it - you will be surprised at how beneficial they can be to your goals.
Construction loans are short-term loans (often high interest) that are used to finance the construction phase of a new building or home. It is important to note that these loans are often more difficult to qualify for, generally requiring a solid credit score and a sizable down payment.
Then, as the construction commences, the money is delivered in installments each time the project moves through its different phases.
Once the construction is complete, the loan can be replaced with a mortgage. There are different types of construction loans and different ways in which this is done.
Construction Loans in 2022
Construction loans are moving closer to the front of the line when it comes to the choices of those looking to buy real estate, whether residential or commercial. Quite honestly, throughout the U.S., the real estate market has exploded - and for each person trying to buy a home or commercial property, many others are doing the same thing. This means that when you finally find the one you’ve been looking for, your chances of getting outbid are really high. And this can, discouragingly, happen over and over again.
With the idea of supply and demand in mind, many buyers are finding it much easier to just go ahead and build the property that will perfectly fit their needs and wants. Yet that doesn’t come without hiccups, too. Opting for a construction loan can be a fantastic move, but it is important to consider that the cost is up on raw materials and, with supply chain woes, there could be a delay in the timeline for the construction. Further, due to the incredible inflation we have seen, many are predicting interest rates to rise later this year.
What does all of this mean for you? It means that moving forward with a construction loan can get you the perfect place to meet your needs without battling others, but you will want to move forward with your plans now rather than later in an effort to save yourself some money.
Construction Loans at District Title
Make 2022 your year by building the property you’ve been searching for. All it takes is a construction loan. To ensure that the process goes smoothly, District Title will work with your lender to monitor the progression of construction - and be with you every step along the way.
Want to know about construction loans? Contact our office today at (202) 518-9300.