Spec Home Loans
Finding spec home loans is not a process that needs to be unduly
difficult. As with every home loan, the best results can be achieved
with a small search on the Internet or with speaking with friends
or colleagues about their lenders.
For the Internet, most of the existing websites include a friendly
application form. Therefore less time is wasted on the application
portion of the spec home loan.
We all know that a spec home is a house that is built on speculation.
What fewer applicants know is the fact that these loans are easier
to obtain than generic home loans. The reason is simple. Spec
homes are cost efficient from the day you purchase it, until the
day you sell it.
A common business for developers
The developer can put spec houses up for sale before the foundation
is poured or right after the construction is finished. With such
an extended sales period, potential buyers can scan the market
for an effective spec home loan. Spec homes aren't known for being
very spacious, but knowing that the maximum loan for a spec home
can reach $1.5 million, might bring some changes into this axiom.
The issue of spec home loans is related to developers, rather
than to buyers. There are two aspects of this type of loan. Applying
for spec home loans is more common for developers. Buyers who
want to purchase a spec home can apply for a normal home loan,
despite the initial name. In other words, spec home loans are
designed for developers while typical home loans are for buyers.
Spec home loans are ideal to fuel the developer's project but
this is not everything.
One should know that the builder/developer must have a good credit
score and another 10-percent post-closing liquidity of the total
amount. Another uncommon requirement might refer to the years
of experience. Chances are that builders meet lenders who require
a certain experience. Developers with only few projects should
avoid these lenders or else risk wasting precious time.
As long as the applicant meets the qualification requirements,
he can hold up to 10 contracts simultaneously. This is like rocket
fuel for applicants. Don't forget that spec home building is all
about the number of houses and not about the volume of customizations.
As with every loan, applicants are curious about the terms. In
this domain, though, nothing is more important than time. With
terms ranging from 12 to 18 months, builders have truckloads of
time to finalize their project and envisage a lovely neighborhood
by the end of that timeframe.
An easy application process
Whether it is a serious project or just one home, builders can
feel relieved. The spec home loan doesn't involve a lot of paperwork.
The lender will be eager to meet a serious builder and help him
to get the most from his loan.
The bottom line is that each applicant must sit down and count
the costs. With so many people involved in the project (real estate
agent, landscape architect, bath designer, interior designer,
lighting designer and many more) being careful with money is of
utmost importance. Without the appropriate financing many projects
fail before they actually begin.