Are you planning on using financing to build your new home? Finding the right loan can be stressful and time-consuming.
Fortunately, Michigan State University Federal Credit Union (MSUFCU) has a construction loan option that can be used to finance your upcoming new home project. This loan can help you get your dream home under construction quickly.
As an MSUFCU preferred builder with 15+ years of remodeling experience, we have helped many homeowners, like yourself, partner with them to finance their dream home construction or remodel.
In this article, you’ll learn about MSUFCU’s construction loan, and its benefits and drawbacks to help you determine if it is the right option for your project.
What’s an MSUFCU construction loan?
The purpose of MSUFCU’s construction loan is to help you finance the construction of a new structure, such as your new home.
Unlike the MSUFCU unsecured home improvement loan, which is meant for remodeling and home improvement projects, the construction loan can only be used to pay for the construction of a new structure.
Interest rates for construction loans are as low as 6.25% APR. Offered in both fixed and variable interest rates, this loan also comes with repayment terms of 10, 15, 20, or 30-years.
A 20% down payment is required for approval. The equity of the property the house will be built on can be included in the down payment.
Offering loan amounts up to $3,000,000, a construction loan through MSUFCU can be used to build new homes in most budgets, from simple to extravagant.
Currently, MSUFCU construction loans are only available in Michigan.
The MSUFCU construction loan allows for up to five withdrawals during the 12-month draw period, which begins at the loan's origination date. It also lets you make interest-only payments during the draw period.
Pros of an MSUFCU construction loan
Convenient draw period: With the MSUFCU construction loan, you have access to up to five draws and interest-only payments during the draw period, which lasts up to 12 months from the loan origination date.
Whether you know the total price for your construction project up front, or you want to make withdrawals as your project progresses, this allows you to easily access the funds you need to pay for your build.
Competitive rates: Interest rates on construction loans as low as 6.25% APR make this loan a cost-effective option to build your new home.
Interest rates on your construction loan will depend on factors such as your credit score and the length of the repayment term.
Ample loan range: By offering amounts up to $3,000,000, this loan is capable of financing your new home to almost any size or specification.
Whether you are building your first home or a luxurious dream home, MSUFCU’s construction loan can accommodate any new home construction within this wide range.
Easy application process: MSUFCU makes it easy to apply for a construction loan and get access to the money you need.
You can apply online, through their mobile application, or over the phone with MSUFCU’s mortgage department at 517-333-2424.
Cons of an MSUFCU construction loan
Only available in Michigan: MSUFCU construction loans are only available for homes being built in the state of Michigan.
While MSUFCU offers traditional mortgages for homes in numerous states across the country, their construction loans must be used in-state.
20% down payment required: Unlike other loans MSUFCU provides, the construction loan requires a 20% down payment.
Cannot be used for remodeling: If you’re planning a home remodeling project, the construction loan is not the right option.
For projects such as these, MSUFCU’s home improvement loan or SmartLineSM home equity loan are better suited.
Conditional interest rate: Interest rates are determined by a variety of factors, including your creditworthiness, the loan-to-value (LTV) ratio, your property type, as well as other factors associated with your loan application.
Your interest rate will be determined when you apply for the loan and may be higher than 6.25%.
Next steps for applying for an MSUFCU construction loan
If you’re in the beginning stages of building your new home in the state of Michigan and looking for financing options, MSUFCU’s construction loan is a viable option for you.
Knowing both the benefits and drawbacks of the construction loan will give you better insight into determining whether MSUFCU’s construction loan is right for you and your new home build.
Our team of home remodeling contractors has over 15 years of experience designing and building beautiful homes in the mid-Michigan area. We also partner with MSUFCU to help our clients find the right financing for their dream project.
If, instead of building an entirely new home, you are interested in remodeling or adding to your existing one, reach out to one of our project development advisors. We would love to talk with you.
To learn more about financing a remodeling project, read the following articles:
*The information provided in this article is for informational purposes only and should not be considered official financial advice. It's always best to consult with a financial advisor or professional before making any financial decisions.*