Stewart Brown Jr – Mortgage Loan Originator – Purchase or Refinance
| A construction loan only covers the cost of building a new home. This includes land purchases, contractor labor, materials and any permit fees. With a construction loan, the home must be completely built and have a certificate of occupancy issued on the property within one year, making it a short-term loan. Mortgages, by contrast, are long-term loans since the term length can last anywhere from 10 to 30 years.
When you apply for a construction loan, you’ll typically have to submit the appropriate financial documentation that you would for any other loan, plus a project proposal for the build that outlines the phases of the project, as well as timelines for completion of each phase.Once approved, the borrower can begin using small amounts of the loan funds to initiate the build. An appraiser or inspector will also be on-site at certain benchmarks during the project to assess the progress and authorize the borrower to continue using the loan funding. Once the build is complete, the borrower must then either pay back the loan or convert it into a mortgage. Keep in mind that construction loans can be riskier for lenders compared to traditional home loans since you don’t have an existing home to use as collateral. Because of this, construction loans may carry higher interest rates. For the most part, you’ll be required to only pay interest on your construction loan until the build is complete. Just like mortgages, construction loans come in a variety of types that can help borrowers reach their financial goals. Here are a few of the most common ones you should learn about: |
| A construction loan only covers the cost of building a new home. This includes land purchases, contractor labor, materials and any permit fees. With a construction loan, the home must be completely built and have a certificate of occupancy issued on the property within one year, making it a short-term loan. Mortgages, by contrast, are long-term loans since the term length can last anywhere from 10 to 30 years.
When you apply for a construction loan, you’ll typically have to submit the appropriate financial documentation that you would for any other loan, plus a project proposal for the build that outlines the phases of the project, as well as timelines for completion of each phase.Once approved, the borrower can begin using small amounts of the loan funds to initiate the build. An appraiser or inspector will also be on-site at certain benchmarks during the project to assess the progress and authorize the borrower to continue using the loan funding. Once the build is complete, the borrower must then either pay back the loan or convert it into a mortgage. Keep in mind that construction loans can be riskier for lenders compared to traditional home loans since you don’t have an existing home to use as collateral. Because of this, construction loans may carry higher interest rates. For the most part, you’ll be required to only pay interest on your construction loan until the build is complete. Just like mortgages, construction loans come in a variety of types that can help borrowers reach their financial goals. Here are a few of the most common ones you should learn about: |
Reach out to me for further detailed information on Construction loan programs.