Construction

Question 1

What are the 2 popular types of Construction mortgage?

Answer 1

● construction-to-permanent (Take Out) loan
● Stand-alone construction loan

Question 2

What is a construction-to-permanent (Take Out) loan?

Answer 2

A loan that converts to a permanent mortgage when the construction is completed. The financing option has two parts: a loan to cover the costs of construction and a mortgage on the finished home.

Question 3

What is a Stand-alone construction loan?

Answer 3

When the borrower does not need permanent financing. The loan will likely have a very short-term repayment period. When the construction is complete and the home is built, the borrower will owe the full amount due.

Question 4

What is a construction loan?

Answer 4

Short-term
I/O during construction.
Disbursement schedule: payments stage after an inspection and title update.
Financial Statements and license