Financing for Home Construction

The terms and conditions of construction loan vary from lender to lender and from project to project. For example, for a small landscaping project, bathroom remodelling, or minor cosmetics to your house, you probably can get by with a home equity loan. Large, time consuming projects such as obtaining construction loan for owner builders, major rehab of fixer upper homes, etc. would require specialized types of construction loans. Construction loans for major project mentioned above are usually paid out in installments as each agreed upon stage of construction is completed. Borrower pay interest on the amounts disbursed to date. Usually when the project is completed, the construction loan will be converted into a mortgage loan after the homeowner obtain the certificate of occupancy.

Some of the best contacts for obtaining construction loans are professional real estate agents who can help you with finding fixer-upper homes or the likes, architects and most general contractors, etc. Construction loans do not adhere by the same standard written by Freddie Mac or Fannie Mae. Construction plans will have to be presented to lender in order to convince them of your commitment to the construction project.

More information on construction loan: Construction Loan FAQ: BankRate.com