When embarking on the journey to build your dream home, understanding the financial aspects is as crucial as the design itself. Among the financing options available, construction loans stand out as a specialized solution tailored for those looking to finance the building of a new home or substantial renovations to an existing property.
Construction loans are short-term loans that provide the necessary funds to cover the costs associated with building a new home or undertaking major renovations. Unlike traditional mortgages, which provide a lump sum to purchase an existing home, construction loans are typically set up as a line of credit. This allows you to withdraw funds as needed during different phases of the construction process.
One of the essential features of construction loans is that they typically carry interest-only payments during the construction phase. This means that you will only pay interest on the amount you’ve drawn from the loan, not the total loan amount, which can significantly help manage expenses during the build. Once the construction is complete, the loan can often convert into a permanent mortgage, allowing you to pay it off in a more traditional manner.
Applying for a construction loan can seem daunting, but knowing what to expect can ease the process. Cannon Mortgage is here to guide you through the process. Reach out today!
