Construction loans are made available to finance the building or rehabilitation of homes. These loans require careful planning and allow the homeowner to personally finance the home construction. Your lender will review and approve the building plans and manage the payments to the contractor. Construction lending requires the efficient coordination of the appraiser, title company and contractor. In most cases, construction loans are used to finance the construction of the home and purchase the building lot in a single transaction.
Most construction loans automatically convert to long-term (permanent) financing at the end of the construction period. This one-time closing feature saves thousands of dollars in closing costs. Once the construction loan is closed, a credit line is established. The balance of this line will increase as the builder receives funds at the end of each construction phase. The homeowner is responsible for the payment of interest on this line each month, based on the outstanding balance at that time. After the completion of the construction, the credit line is amended to become permanent financing.
The FHA 203k Streamline Program is a government insured program created to finance the rehabilitation of homes in need of repair. These loans may finance up to $35,000 in repairs/upgrades with little or no red tape. The final loan amount is closed up-front and the contractor receives their funds from the lender as the work is performed. These loans are offered to homebuyers and homeowners with the same benefits as standard FHA loans:
Presidential Mortgage Group has long been recognized as a leader in the construction lending industry. Call your local loan officer to find out how we can help you build the home of your dreams!