How to Qualify for a Construction Loan

Tuesday, May 23, 2017
Posted by admin under Construction Loans 

A couple discusses house blueprints.

There is a reason why many homeowners purchase existing homes or go with a builder in a subdivision. The process to getting approved for construction loans in East Central Illinois and West Central Indiana, is lengthy and difficult. The good news is that you can get easily approved for this type of loan as long as you meet all of the criteria listed next.

You Need a Qualified Builder

In order to get a construction loan, you'll have to be involved with a qualified builder or general contractor who has experience building a home from the ground up. Nobody is arguing the fact that you may be able to do this yourself, but a bank is not going to loan you any money to try it out. If you don't have any proven record in the building industry, then you should hire a builder or contractor for your project.
The good news is that hiring the right builder can actually save you money, because they have the right contacts with suppliers for materials, and they may already have access to a reliable crew. 

Your Lender Wants Details

It's not enough to apply for a construction loan of a 3-bedroom home. Your lender is going to want to see a lot more details. They'll want to see the blueprints, floor plans, and the list of materials that are going to be used in your home. They'll want to know how tall your ceilings are and what type of insulation material you will be using. Fortunately, you'll get this covered with the first step, as your builder or general contractor will be the one to provide you with all of that information.

You'll Need an Appraisal

It can be difficult to appraise a home that hasn't been built yet, but it has to be done in order to get the loan. The appraiser will look at the value of your land, all of the details about the type of home you're building, and compare it to similar homes in the area. The more information the appraiser has, the better. Of course, at the end of the construction, there will be another appraisal to convert the construction loan into a regular home loan. 

You'll Need a Down Payment

Many builders of subdivisions have the ability to offer you attractive financing terms with a small or even zero down payment. But when you're dealing with a construction loan for your personal residence, you can expect to come up with a rather sizable down payment. In fact, 15% is the minimum amount required for a construction loan. Some lenders might even ask you for 25%. Plus, they won't loan above the appraised value of the home, so if you want to build a fancier home than the appraisal can support, you might have to come up with the difference.

A couple checks on the progress of their home construction.

Now that you know what to expect from your lender, it's time to get all of your ducks in a row. It's a good idea to discuss your plans with your lender before you invest any money of your own. If you plan to include the property in the construction loan, this is something you should discuss with your lender ahead of time. 

Tagged Construction Loans  Development Loan  Home Loan  Consumer Loans  0 Comments

Tips for Landing a Business Loan to Fund Your Startup

Monday, May 22, 2017
Posted by admin under Commercial Loans 

If you're looking to start a business, you're likely faced with one big factor that's hindering your leap into business ownership--money. Getting the funds to start your business can be tough, and trying to get a loan from a mortgage lender in Vermilion County is a very daunting prospect for many first-time business owners. If you find yourself searching for a small business loan, consider these tips for getting the funds you need.
Business Loan

Be Passionate

When presenting your case to a loan officer, you may be tempted to seem apathetic about whether or not you get the loan; after all, desperation is not a good look on anyone. But this is far from the right approach. When it comes to small startups, many times, it's the passion of the owner that pushes it through those difficult first years and turns it into a success. You need to exude the kind of passion that can overcome any obstacle and make your dream a reality. That's the kind of passion that gets funding.

Know Your Stuff

Of course, being passionate is far from the only thing that matters when it comes to getting a business loan. Lenders want to know that you've done your research and have the knowledge needed to get this company off the ground. That means testing the market for your product or service and proving that there's a demand for it, as well as finding out how many competitors there are nearby. A history of working with successful startups can also be extremely helpful; banks aren't likely to throw money at someone who is untested in the world of business.

Sort Out Your Finances

Get your personal finances in order before asking for a business loan. Lenders want to know that the person they're giving money to is capable of managing finances responsibly. So you need to pay down your debts and improve your credit score as much as possible before asking for that loan.
A Startup Company Meeting

Think Local

Banks have a lot of investment opportunities in front of them, so it's going to be tough for you to grab their attention. Local lenders, on the other hand, are more likely to hear you out and consider your application. But perhaps more importantly, these lenders also have a vested interest in improving the community and local economy by supporting the growth of new businesses. Your startup may be exactly what the community needs to bring in more jobs and bring more money to the area. That's always a good thing for local banks.
Keep these tips in mind when you start applying for small business loans in Vermilion County, IL and you'll be much more likely to succeed.

Tagged business loan tips  get a loan  Small business loans  startup loans  0 Comments

4 Reasons Why Fixed Rate Mortgages are the Best

Tuesday, May 23, 2017
Posted by admin under Mortgage Loans 

A loan officer holds out a pen to sign a mortgage contract.

If you've been looking into a home loan, you've probably already discovered that there are fixed rate mortgages in Vermilion County, Illinois, and adjustable rate mortgages. Fixed rate mortgages lock in a specific interest rate which will never change over the life of the loan. Adjustable rate mortgages change depending on the raising and lowering of the prime interest rate. When you're looking into mortgage lending in Vermillion County, it's important to know 4 reasons why a fixed mortgage rate is the better choice as you begin the loan process.  

1. Stability

Perhaps the biggest draw for home buyers in choosing a fixed rate mortgage is the stability factor. You'll know at the beginning of the loan exactly what your payment will be for the life of the loan. The only exception to this is if your payment includes insurances or property taxes, which can change the monthly payment slightly. Otherwise, the principal and interest payment will remain the same, because changes in interest rates won't affect your loan since you locked it in at the beginning. This is beneficial for those on a tight budget or fixed income, because if you know how much of a payment you will be able to make consistently, you don't have to worry about interest rates going up. Those with adjustable rate mortgages don't have this luxury. After the fixed period of their loan ends, they are subject to higher payment due to rising interest rates. This can be disastrous when interest rates go up significantly, especially if income remains the same.

2. Affordability

Fixed rate mortgages are not only affordable to home buyers because they know what they'll be paying every month, but most fixed rate mortgages can be paid off early without any prepayment penalties. This means that the sooner you can pay off the principal, the more money you'll save over the life of the loan because you won't have to pay interest for all those months that you would if it took the entire life of the loan to repay the mortgage. Although prepayment may not seem possible at the beginning of the loan, the nature of a static payment actually makes this more likely because many homeowners will see an increase in their salary over the years, so with good budgeting you can pay the loan off early and avoid paying more in interest.

3. Low Fixed Rates

In the past, adjustable rate mortgages were favored because they often started out with lower interest rates than fixed rate mortgages. However, with interest rates low right now, it's a good idea to lock in an interest rate if you plan on a 30-year loan because interest rates are likely to go up from here. 

A couple dreams of owning a home.

4. Numerous Options

Those with good credit scores can qualify for a few different fixed rate options that make it easier to pay off the loan sooner with a very low interest rates. These include 15-year mortgages and biweekly fixed rate mortgages. The goal of these is to speed up amortization so that you can pay the loan off more quickly. These options often have an even lower rate than other 30-year fixed rate mortgages.

Tagged Fixed rate mortgages  Fixed rate loans  Mortgage lending  0 Comments

All You Need to Know about Consumer Loans

Tuesday, May 23, 2017
Posted by admin under Consumer Loans 

As the economy continues to improve, many people in Vermilion County area are looking to personal loans to meet their financial obligations. Personal loans, including consumer loans in Vermilion County, Illinois, and mortgages, are more helpful to the average consumer now then they have been in the past decade. If you find yourself looking for some financial assistance, here are some things you should be aware of before taking out a personal loan or before you start looking for a mortgage lender in Catlin Illinois. 

Interest Rate and Credit Rating

The first thing to understand when deciding whether a personal loan is right for you is that it's sometimes possible to get a better interest rate with a personal loan than with a credit card. Whether you qualify for a low interest rate personal loan is completely dependent on your credit score. Since the interest rate from loan to loan can vary so significantly, if you decide to take out a loan, it's important to shop around for the best rate. 

Additionally, most personal loans are treated as a fixed-term loan when your credit score is calculated, which is typically better for your credit than a revolving line of credit or credit card. Another thing to keep in mind is whether the interest rate is a fixed rate obligation or variable. If it's a fixed rate, the interest rate will remain the same for the life of the loan. Variable rates can fluctuate depending on how the rest of the economy is doing. Most personal loans are fixed rate, which means your payment won't fluctuate over the life of the loan.

Compare to Other Types of Borrowing

Although personal loan rates are often better than credit cards, it's difficult to say for certain which will be better for you until you’ve compared both products. Make sure you thoroughly explore all available options before taking out a personal loan. Although the interest rate is often very low on a personal loan, these types of obligations are unsecured debts, meaning that the bank does not require you to put your home or vehicle up as collateral if the loan defaults. This lack of backing, unlike a mortgage or secured vehicle loan, is riskier for the lender. If you have equity in your home or other assets, you may be able to get a lower rate on a loan than a personal loan.  If you think a personal loan will suit your needs better, you can often check out rates online to find the best deal available with your credit score.  

Origination Fees

You also need to understand what types of fees are associated with borrowing money through a personal loan. When shopping for a loan, it may seem like the only thing you need to be aware of is the interest rate, but unfortunately, this is simply not the case.  Most loans come with both an origination fee and an application fee.

Application fees are typically a few hundred dollars for most personal loans. There are some lenders that also impose a prepayment penalty, meaning that if you decide to pay your loan off faster, you're required to pay additional fees. Make sure to do thorough research on any potential additional fees you'll be obligated to pay before taking out a personal loan.

Tagged Loans  Personal loans  Finances  0 Comments

Your Guide for Getting Rural Loans Easily

Tuesday, May 23, 2017
Posted by admin under Mortgage Loans 

USDA rural development loans are an incredible resource for prospective homebuyers living in rural areas. Rural loans in Vermilion County, Illinois, are an attractive option for financing because they require no money down and have very competitive rates. Because this loan has so many appealing features many people assume it must be very hard to qualify for this loan or that the process is too time consuming or confusing. Fortunately, that's not the case. Here's what you need to know to obtain a rural loan in Danville, Illinois. 

Loan on Gold Coins

Gather Eligibility Information

The most important thing you can do to make sure the rural loan process goes smoothly is to understand eligibility requirements and then gather the appropriate documents to verify your eligibility. First of all, you must live in an area that qualifies as rural, which any mortgage broker or bank can easily tell you. You should also gather documents such as proof of income, residency status, tax returns, proof of identity, and financial documents like bank statements. Even if you don't have a home under contract, the sooner you gather this information, the quicker the process can go once you begin.

Obtain Credit Score

It's also a good idea to know what your credit score is when you begin the process to make sure you qualify for a rural loan. Fortunately, the minimum score required is reasonable, around 640. If your credit is lower than this, it doesn't automatically mean you're disqualified; there may be some room for leniency. In the meantime, do your best to lower your debts, pay bills on time, and stay as far from your credit line as possible on credit cards.

Know Income Limits

The income limit for a USDA loan isn't a set amount. The limit depends on what your income is compared to the average of the region. You can get a more specific income limit by visiting the USDA website or talking to a loan officer at Catlin Bank. In some cases, if the income is higher than the limit, you may still be able to obtain the loan because certain expenses like medical expenses and child care can be deducted when considering income qualifications.

Know Loan Limits

USDA loans are issued as direct or guaranteed loans. Direct loans come straight from USDA, while guaranteed loans are through a third party lender.  The monthly payment (including interest) should be 43% or less of the total monthly income. Your process can go more quickly if you know what price range of home to look for so that you don't get to the loan process and realize you can't qualify for that amount with a rural loan.

Loan on Gold Coins

Understand Loan Terms

Last of all, as you go through the loan process, be sure to understand the loan terms so that there are no surprises at closing. There is typically no down payment required and no private mortgage insurance. The loan is usually a fixed rate for 30 years, but be sure to know exactly what the terms are throughout the process.

Tagged rural loans  Rural loan process  Obtaining rural loans  0 Comments