Building a home might sound like something reserved for the rich and famous, but the truth is, it might be easier than you think to get a construction loan.
What is a construction loan?
Construction loans are short-term, higher-interest-rate mortgages that cover the cost of building or renovating a home. The buyer qualifies for the final mortgage and the lender pays the contractor for cost on a pre-approved schedule. Once the construction is complete, the loan is converted into a traditional home loan.
Type of Construction Loans
• Construction to Permanent – Converts to a permanent loan with the interest rate locked in at closing.
• Construction Only – Must be paid off when construction is complete, so the borrower will then need to get…