Construction loans: Turning a property into a dream home
Construction loans: Turning a property into a dream home
Some homebuyers are lucky enough to find a property that’s move-in ready, but more often than not, a little work is needed first. That can be especially true for rural properties, which often feature larger acreages and multiple structures. Thankfully, there’s a loan specifically meant to help buyers to finance these improvements and turn a piece of property into their dream home. It’s called a construction loan.
“A construction loan is basically going to cover anything that's going to add value to your property,” said Leigh Rodebaugh, a Compeer Financial lending officer. Here are a few things Rodebaugh recommends keeping in mind when considering a construction loan:
Work with an experienced team
When buyers are already focused on finding the right home loan, the construction loan process can seem daunting. The good news is that Compeer Financial has a team of experts who can help simplify that process. Plus, a specialization in rural properties means lending officers like Rodebaugh understand the unique considerations that come with them.
“From a planning perspective, it’s really beneficial for your loan officer to be able to give you a 360 view on what getting all of this accomplished is going to look like,” Rodebaugh said. “You've got a trusted advisor with you through every step of the process, and that makes things easier.”
Understand what construction loans can cover
Some of the most common construction loans Rodebaugh works with cover new home builds or renovations to existing homes. They can also cover things like sheds and barns.
When Ashley and Carl Thalacker decided they wanted to build on the family’s land in southwest Wisconsin, they needed a construction loan for what would eventually become their dream home. The couple wanted to self-contract the work, and while many traditional banks either wouldn’t lend under those circumstances or would require a larger down payment, their loan officer at Compeer helped them get a loan they could afford.
… And what they can’t
While a typical construction loan can be used for a wide variety of projects (on both new and existing builds), they might not cover all of a property's needs.
This can be especially true for properties that can produce income. Some lenders won’t offer construction loans for components of a property that are used for business purposes. A Compeer lending officer like Rodebaugh can refer clients to the agricultural side of the company for a loan that will cover those aspects of a property.
“If somebody is looking to put up something to raise cattle or pigs in, for example, I'm going to direct you over to one of our professionals on the ag side,” she said. While a construction loan can’t be used for equipment, there are lending options for that, too. The Dick family took advantage of an equipment loan from Compeer when they expanded a horse stable business on their new acreage. “The hope, dream and goal is that if you're looking to live on the farm, live in the country, do any kind of farming or get involved in any type of ag activity, that we're able to help you on whatever scale that takes,” Rodebaugh said.
People have more choices and opportunities than ever to live where they want, and for many the peace and quiet of the rural lifestyle is increasingly attractive. Learn more from contributing author Chad McGlothlen and the Compeer team.
* Borrowers must be current on loan obligations to qualify. Fees can vary by loan product. Terms, conditions and programs are subject to change.