Construction loans require more documentation and oversight than a standard mortgage, and may have more stringent credit requirements, because lenders consider financing construction to be a greater risk than extending loans for purchasing an existing home.

Yes, you will usually need 20% down for a conventional construction loan from most lenders, although it is possible to pay less for building loans financed by the FHA, USDA, or VA.

Listerhill Credit Union is able to offer some of the lowest construction loan rates in Alabama, Georgia, Mississippi, Florida and Tennessee because it is a member-owned financial cooperative, not a commercial bank. That means more of our earnings go back to our members in the form of lower loan rates, rather than being used to pay dividends to corporate shareholders.

Yes, you do need to be an existing member of Listerhill Credit Union to qualify for a loan. Becoming a member is easy, and once you join, you are a member for life, even if you retire, move away, or change employers.

To qualify for membership with Listerhill, you must meet one of the following requirements:

• You live in the states of Alabama, Georgia, Mississippi, Florida, or Tennessee, you are eligible to become a member.
  • Depending on your eligibility, we may require membership in an approved association at no cost to you.
• You are a family member of a current or potential Listerhill member.
   

A fixed-rate mortgage can make good financial sense if you’re looking for financial stability over a period of several years. While you will be charged more in total interest over the term of your loan (up to a 30-year term), you’ll pay the same amount each month (not including taxes and insurance premiums). That makes it easier to plan your monthly budget and set money aside for other priorities, like starting a family. Best of all, part of the money you spend on payments goes to build your equity — or ownership stake — in your home. That’s an asset you can turn into cash by selling or refinancing your home or borrowing against it in the future.

Assuming you borrowed $300,000 on a fixed 25 year mortgage loan at a current average annual percentage rate (APR), you could expect to pay about $2,120 per month (not including taxes and insurance premiums). This does not include any down payment you might make on the total purchase price of the house.

Your debt-to-income (DTI) ratio compares your monthly debt payments relative to your gross monthly income. Mortgage lenders use it to evaluate how well you manage debt and whether you can afford a new loan. A lower DTI generally makes it easier to qualify for mortgages and other loans. For conventional home loans, many lenders look for a DTI below 43%.

A down payment of up to 20% is considered good by many lenders. This gives you a significant stake in the property that you are borrowing money to buy. Lenders see a substantial down payment as a good indicator that you will continue to make payments because you risk losing your own money if you do not. Typically, you’ll get a lower mortgage interest rate the more money you are able to put down, although lenders do look at other factors as well.

Your credit history is extremely important to lenders when deciding whether to offer you a loan, because it provides an indication of how likely you are to pay back what you owe. This helps lenders determine how much of a risk you are. Typically, the better your credit history, the less risky you appear to lenders, and the better (lower) the interest rate you are likely to be offered.

Lenders do, however, look at other factors such as income, job stability, and existing debts. Credit unions like Listerhill are also known for taking a more holistic look at their members’ finances when deciding whether to approve a loan, rather than relying solely on the numbers.

Yes, you need to be a Listerhill member to apply for loans. To qualify for membership with Listerhill, you must meet one of the following requirements:

• If you live in the states of Alabama, Georgia, Mississippi, Florida, or Tennessee, you are eligible to become a member.
• Depending on your individual eligibility requirements, we may require membership in an approved association at no cost to you.
• You can also qualify for membership by being a family member of a current or potential Listerhill member.