Construction Loans have helped many peoples to built their dream house according to their desired shapes and life styles. But getting these loans are not easy as you think, it can be a scary task. Nevertheless, if you well prepared before meet up with various lenders, your chances of getting the loan is higher.
There are several types of these loans offering by multiple banks and lenders available to suit the needs of various borrowers.
1) One time close - this is the simplest type that finance for new home, It contained construction costs and long term financing of the house. Borrower may be required to pay interest during the construction period or making mortgage payments. Once construction completed, making payments until the loan satisfied.
2) Two times close - This 2 time close involve separate loans, with one to cover during construction and the other to cover long term financing. During construction, borrower required to pay interest only and after completion must sign a permanent mortgage agreement. For this long-term mortgage, borrower may get it from lender or another bank.
3) Modification loans - similar with 1 time close, just engaged with 1 lender. The 1st fund is based on the construction budget, lender may release additional funds when needed at same rate as original loan. The 2nd mortgage is assigned, the interest rate is usually lower than loan for construction.
4) Commercial loans - as the name implies, these loans are for commercial buildings such shops, stores and shopping center. When construction is completed, the loans will be rolled into a long-term financing or maintained with the original lender until the business begins to generate revenue to pay back the loan.
5) Bridging loan - Used to finance commercial projects while pending the long term finance. These loans typically designed for short term use, the loan term normally less than 5 years.
For more loans information and tips, please check out Various Loans Guide instead of Construction Loans
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