Hi, my name is Adriana Guy with Emerge Rebuild. And today, I want to talk about how to determine whether or not you need construction financing and a second mortgage when rebuilding after a natural disaster. Please keep in mind that these are just opinions.
Step one, without knowing the full cost to rebuild your home you won’t be able to assess whether or not you’ll need to seek out additional monies.
Step two, an option may be to reallocate funds from the personal property contents and other parts of the insurance policy towards your structural rebuild. If you are able to maximize the other buckets of your insurance policy, such as your ALE (Additional Living Expenses) and your contents, you may be able to reallocate those funds towards your construction. This will reduce the amount that you may need to borrow.
Step three, do not pay off your mortgage. Whatever money is received from the insurance company ask your lender to put it into an escrow account. Do not pay off the mortgage using that money until you know the full cost to rebuild your home. Please note that for those of you who have already paid off your mortgage, there are still options available to you. If you’d like to discuss these options in more detail, please feel free to contact us.
Step four, assess how much money you’ll need to borrow through construction financing. Many institutions are offering loans at up to 6 to 7 percent interest. It is our view that there are many options for those who lost their homes to borrow money at less than 3 to 4 percent. Please feel free to contact us and we can walk you through those options.
Step five, obtaining a second mortgage in order to pay off the construction loan. You’ll need to ensure that you have a second mortgage in place when your home is completed to pay off the construction loan. There are many options for second mortgages available to homeowners and you should assess all options before making any final decisions.
We understand that each and every homeowner situation is unique. If you’d like us to review your specific situation, please click the link below to book a consultation.
We hope you found this video helpful. If you liked this video, please click the like button below and for more videos from us please subscribe to our channel below. Once again, my name is Adriana Guy with Emerge Rebuild.