When you are ready to build your first home or that dream home that you have been wanting for so long you will probably wind up needing help with the financial part of the building process. The funding for your new home is available through new home construction loans. Both owners and builders can use construction loans, although some lenders are a bit hesitant about lending to first time homebuilders.
Construction loans are a homebuilders dream funding. This loan may or may not include the cost of the land used to build your home on. These loans set up a line of credit that will pay suppliers and sub contractors as the building process goes along. This will make both workers happy because they do not have to wait until the completion of the home to be paid for their services. A new home construction loan will be set up in monthly stages or into stages where specific portions of the building process are finished. During these stages, a construction draw will be organized that will state the amount of funds that were used during that specific time period. The construction draw is then given to the lender so that payment to the building workers can be executed. A residential mortgage is required before you apply for a home construction loan and must be presented to the lender you choose before the building process begins.
source:http://ezinearticles.com/?New-Home-Construction-Loans-101&id=119118
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