Home building financing questions and answers. Discover which financing is ideal for the construction of your new home.

How soon after I start building my new home should I obtain a home loan?
Actually, the first step to building a home is obtaining financing to cover the cost of building your new home. This is referred to as a construction loan.

Why is a construction loan necessary?
As building a home incurs a cornucopia of costs, homebuilders cannot afford to defer the expenses, correlated to building material, equipment and labor.  With a construction loan, the homeowner or borrower can pay for construction costs over the duration of completion.

Is a construction loan the same as a mortgage?
No, a construction loan ranges between six and to 12 months or for the duration of the construction. A separate home loan is needed once the home is built.

Are there any loans that cover the cost of building and financing my home?
Yes, these are known as “all-in-one construction loans.” They cover both the cost of building and maintaining the mortgage.

Is the construction loan less expensive than the all-in-one construction loan?
Actually, construction loans or two-time close construction loans tend to be more expensive than the all-in-one construction loan. Since two-time close construction loans call for several closings, one at the start and conclusion for refinancing the loan into a permanent home loan or mortgage, it accompanies a variation of costs.

Are there any advantages or drawbacks to the all-in-one construction loans?
The all-in-one construction loan is lauded for its convenience, meaning that it reduces overall closing costs. On the other hand, depending on the current interest rate, the all-in-one loan hinders a homeowner from shopping around for a better rate or loan.

If I select the all in one construction loan, do I have to pay interest during the home-build?

From lender-to-lender, the interest responsibility varies. The best all in one construction loan does not have an interest rate.

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