Interest rates are still unbelievably low – they continue to amaze us. Bank Mutual stopped in this week to drop off their pricing sheet.
Last year, Bank Mutual introduced a construction loan that locked the mortgage rate in at the time you closed on the financing for the construction loan. It made a lot of sense because not too many people thought rates would stay low. The way this type of loan works is you lock in the interest rate for the complete time of the loan where with a conventional construction loan, once the home is completed, you need to go through another closing at which time you get your final interest rate.
This can be costly if rates go up during construction. Now, you can lock in the interest rate, which is slightly higher than a traditional construction loan. But, if interest rates don’t go up, then you simply re-finance your loan and you have the best of both worlds.
Right now, you can get a 30 year FIXED construction loan for 4.125% locking you in for the entire length of the loan. This is incredible. If rates stay the same or go down, you simply re-finance.
Again, this is why if you are thinking about building, there is no better time than now to build your dream home.