Question by jiggywalker2008: Would a construction loan be the type of loan for building a new home?
If you wanted to build your own house, would you apply for a construction loan? What are the terms of a construction loan? How hard is it to get one?
Best answer:
Answer by Toby L
Yes – a construction loan is simply that, when you are in the construction phase you have a construction loan, then when are finished building you will turn that into a home loan
Add your own answer in the comments!
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Yes you want a construction loan and one that can be converted to a permanent loan. Why? During the construction process the builder is entitled to a draw (of money) at predetermined stages. Also, with a construction loan you only pay interest on the money that is drawn. When the home is completed you then need a permanent loan.
realtor.sailor
yes that is what you want. You will need insurance and during the construction phase you pay the interest only on the money. One a C/O is given you must obtain permanent financing or start out with a construction to perm loan from the get go
I am a mortgage banker in TN & KY