News Excerpt:

NEW YORK (Reuters) - Applications for home mortgages increased last week, boosted by a surge in purchasing and refinancing activity even as mortgage rates rose, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity increased 17.4 percent to 887, adding to the previous week's 6.5 percent gain.

The MBA's seasonally adjusted index of refinancing applications climbed 25.6 percent to 2967.4 after rising 10.3 percent the prior week.

The MBA's purchase index, a gauge of loan requests for home purchases, rose 10.4 percent to 529.3, a record high, after climbing 3.6 percent the previous week.

"This week there was a combination of record-setting purchase activity as well as a substantial pickup in refinance applications, with the refinance index at its highest level since April 2004," Michael Fratantoni, senior director of single-family research and economics at the MBA, said in a press release.

According to the MBA, fixed 30-year mortgage rates averaged 5.62 percent last week, excluding fees, up 7 basis points from 5.55 percent the previous week. Rates were lower than in early April, when the fixed 30-year mortgage rate was at 5.91 percent.

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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