Is a New Construction Loan Right for You?
Consider a new construction loan if you want to build a custom home or invest in a property development. Ideal for individuals with detailed plans, a reliable construction team, and a clear budget.
How Does a New Construction Loan Work?
How Does a New Construction Loan Work?
How Does a New Construction Loan Work?
New construction loans typically follow a process involving several stages of funding. These stages correspond to different phases of construction, such as foundation, framing, and finishing.
- Application and Approval: submit detailed plans, specifications, and budget for approval.
- Draw Schedule: Agree on draw schedule that outlines when funds will be disbursed based on construction milestones.
- Disbursement: Receive funds in stages as each phase of construction is completed.
- Interest Payments: Pay interest only on the disbursed amount during the construction phase.
- Completion: Upon completion, the loan converts to a traditional mortgage, or you can secure a separate permanent mortgage.
Benefits of a New Construction Loan
How Does a New Construction Loan Work?
How Does a New Construction Loan Work?
- CUSTOM HOME: Finance the building of a home tailored to your exact specifications and needs.
- FLEXIBLE DISBURSEMENTS: Funds are released in stages, ensuring you have the money when you need it.
- INTEREST-ONLY PAYMENTS: During construction, you typically pay interest only on the disbursed funds, easing cash flow.
- ONE-TIME CLOSE OPTIONS: Some loans offer a one-time close feature, combining construction and permanent financing into one loan.