Construction loans are financial instruments that are used to finance
real estate construction.
Recent Construction Loan News
Using a Construction Loan to Build Your Retirement Dream Home
Construction loans operate a little differently than a typical home mortgage, so you need to know a couple of things: like what's the difference between a construction-to-permanent loan and a stand-alone construction loan.
Kiplinger. Thursday, 24 Oct 2019 07:07:48 -0400.
In the residential real estate market,
there are two ways to finance construction: 1) via two loans,
an initial construction loan that covers the construction period and
a follow-on permanent loan that is used to pay off the construction loan;
or 2) via a construction-to-permanent loan where the construction loan is
converted to a mortgage after the certificate of occupancy is issued.
A construction worker reviews plans outside of a residential construction
site. Unfinished homes receive finishing touches before new
residents move in. Soon this site will be full of grass, trees, and
warmly lit windows as neighbors move in and call this new neighborhood
home. The noise of construction will be replaced with the sounds
of nature and children playing.
In both cases, the construction of the home is financed by the
construction loan, which the lenders pay out in stages as the builder
needs funds. The lender must, therefore, monitor the builder's
progress, which is one reason why fees on construction loans are higher
than on conventional loans. During the construction period, you'll
typically have to pay interest-only payments based on a variable rate.
For home buyers that are planning to sell their current home once their
new home is built, a bridge loan may be a good option. In
residential real estate, bridge loans are used to span the time between
when buyers buy a new home and when they can sell their old home.
When paired with a construction loan, the bridge loan can be used as a
down payment. To find rates on construction loans and bridge loans,
check out hsh.com. For more information about
construction loans and answers to frequently asked questions about these
loans, visit the
Commercial Construction Loans
Two common types of loans in the commercial real estate market are
acquisition and development loans and construction mini-perm loans.
Acquisition and development loans are long-term, fixed-rate loans that can
be used to acquire and develop fixed assets such as land or a
building. Construction mini-perm loans are typically used to finance
the construction of income-generating properties that need to establish an
operating history before the owner can qualify for long-term
financing. Mini-perm loans typically last between three and five
years; they are often used to finance construction of shopping centers,
office buildings, industrial properties, and
large apartment complexes. For more information or to check out
commercial construction loan rates, visit
Concrete, metal, and wood rise several stories into the sky, as an
unfinished commercial building is constructed. A yellow crane
perches atop the construction site. Day by day, the construction
site is transformed. Soon the construction site will be
replaced by a completed building.