A new construction loan is a specialized type of mortgage designed to finance the construction of a new home. Unlike traditional mortgages that fund the purchase of an existing property, new construction loans provide the funds needed to build a home. These loans typically cover the costs of land, materials, labor, and other expenses involved in the construction process.
Draw Schedule: Funds are released in stages, known as "draws," as construction milestones are met. This ensures that you only pay interest on the money that has been disbursed.
Interest-Only Payments: During the construction phase, you'll typically make interest-only payments based on the amount of the loan that has been drawn. Once the home is complete, the loan can be converted into a traditional mortgage, and you'll begin making principal and interest payments.
Flexible Terms: New construction loans offer flexibility in terms of loan amounts, repayment schedules, and interest rates, allowing you to tailor the financing to meet your specific needs.
The new construction mortgage process depends on whether you choose a one-time or two-time close
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