Unlike a 30-year mortgage, a construction loan usually lasts 12 to 18 months and depends on the land used, the construction period, and how soon the project is completed. After the building process is complete, construction loans convert to mortgage loans until the home is paid off. Construction loans typically come with higher interest rates and are only intended to cover the building process. Whether you’ve already bought the home of your dreams or want to build something from the ground up, construction loans cover just the short-term costs of constructing or remodeling a house. In this article, you’ll learn all about the different types of construction loans, how they work, and what’s required to get one. Construction loan requirements must be followed closely before a lender is willing to issue funds. If you’re interested in customizing your home, you may wonder what the requirements for a construction loan are. Few properties meet all of a buyer’s needs when they look for suitable houses, which is why construction loans offer a unique possibility to build your own dream home or modify an existing one.
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