Construction Loans for New Homes
Financing a New Construction Project
Construction Loans are a bit more in-depth compared to normal home loans and mortgages. Since the home or building doesn't exist
yet, the bank will want to know a lot of information about the project before they lend you the money.
Different than Standard Home Loans
Although they are not drawn up and underwritten in the same fashion as standard mortgages, there are some typical features often
found with a construction loan. They generally require interest-only payments during the actual construction and become due
on project completion or when the home can be occupied.
Construction loans are typically variable rate. Between the lender, the contractor, and you, a schedule of progress is drawn up based on the stages of construction. This schedule is used to determine dates on which interest is charged based on how much money has been disbursed. Current Equity
Another thing to consider with construction financing is current equity. For example, if you own the land where the construction
is to take place, that can be considered equity and be highly beneficial when getting financed. If the lender would otherwise
not want to finance as much of your project as you'd like, that equity may be used as leverage.
Construction-to-Permanent Mortgage
Some people who are financing new construction get construction-to-permanent loan programs. With this type of loan, the construction
loan becomes a regular mortgage after the construction is complete. Although this type of program can carry slightly higher interest
rates, you only need to deal with one loan application and one closing.
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Home Buying Vocabulary
Mortgage CalculatorThis calculator will compute the monthly principal and interest payment on a mortgage. It does not include insurance or taxes.
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Frequently Asked Question
What are closing costs? Answer:
These are the expenses involved in the mortgage process, from the initial application all the way through the finalization of your loan. Closing costs are paid by the borrower and may include an application fee, appraisal costs, clerical expenses, and a variety of other things. |

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See Also
National Financer Provides Construction Loan Quotes in all 50 States:
- Alabama Home Loans
- Alaska Home Loans
- Arizona Home Loans
- Arkansas Home Loans
- California Home Loans
- Colorado Home Loans
- Connecticut Home Loans
- Delaware Home Loans
- Florida Home Loans
- Georgia Home Loans
- Idaho Home Loans
- Illinois Home Loans
- Indiana Home Loans
- Iowa Home Loans
- Kansas Home Loans
- Louisiana Home Loans
- Maine Home Loans
- Maryland Home Loans
- Massachusetts Home Loans
- Michigan Home Loans
- Minnesota Home Loans
- Mississippi Home Loans
- Missouri Home Loans
- Montana Home Loans
- Nebraska Home Loans
- Nevada Home Loans
- New Hampshire Home Loans
- New Jersey Home Loans
- New Mexico Home Loans
- New York Home Loans
- North Carolina Home Loans
- North Dakota Home Loans
- Ohio Home Loans
- Oklahoma Home Loans
- Oregon Home Loans
- Pennsylvania Home Loans
- Rhode Island Home Loans
- South Carolina Home Loans
- South Dakota Home Loans
- Tennessee Home Loans
- Texas Home Loans
- Utah Home Loans
- Vermont Home Loans
- Virginia Home Loans
- Washington Home Loans
- West Virginia Home Loans
- Wisconsin Home Loans
- Wyoming Home Loans
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