Construction Loans
Florida Construction Loans
Construction loans are short-term, interim loans used to pay for building a new home or another real estate project.
The builder or developer borrows it from a bank, and when the project is completed, the loan is paid off and the borrower obtains traditional financing.
In some cases, the borrower may be able to roll the construction loan over into a permanent mortgage.
Construction loans can be an excellent option for real estate investors who are looking to finance the purchase and construction of investment properties.
But how do they work?
Call today to learn about how construction loans work and what you need to know before applying for one.
How Do Construction Loans Work?
Construction loans are typically short-term loans with a repayment period of one year or less.
They are typically interest-only loans during the construction period, with the entire loan amount due and payable at the end of the term.
Some lenders may offer construction loans that can be converted into a regular mortgage once construction is complete.
In order to qualify for a construction loan, you will likely need to have a good credit score and a down payment of 20% or more.
You will also need to provide detailed plans and specifications for the proposed construction project.
Once you are approved for the loan, the lender will release funds in installments as progress is made on the project.
Construction Loan Benefits
Why You Should Choose Us
Personal Loan Specialist
Adone Mortgage is a personal loan specialist that offers a wide range of mortgage products to suit your individual needs. Committed to providing excellent customer service to help you achieve your financial goals.
Honest Rates and Approvals
A variety of mortgage products are available to qualified buyers. Our mortgage loan officers are committed to finding the right loan for you and will work with you to get the best rate possible.
Competitive Rates
Our goal is to save you money and help you reach your financial goals with competitive mortgage rates. Paying your mortgage monthly will be one less worry you have to deal with.
Frequently Asked Questions
A: A construction loan is a short-term loan used to finance the building or rehabilitation of a property. The interest rate on a construction loan is usually higher than on a mortgage, because the lender takes on more risk.
There are two types of construction loans: owner-occupied and investor. An owner-occupied construction loan is for people who plan to live in the home they’re building. An investor construction loan is for people who plan to rent out the property once it’s finished.
Construction loans typically have variable interest rates, which means they can go up or down over time. They also have lower approval rates than regular mortgages, and borrowers are typically required to put down a larger down payment (20% or more).
A: It’s not harder to get a loan to build a house, but it is different. Most banks offer construction loans, which are short-term loans specifically for building a house. The interest rate is usually higher than on a regular mortgage, and the loan is paid off as the house is being built, with the builder acting as the intermediary between the bank and the homeowner.
A: A credit score of 680 or higher is generally needed to qualify for a construction loan.
Lenders want to make sure that you’re a responsible borrower who is likely to repay the loan, so they’ll look at your credit score to get an idea of your credit history. A high credit score indicates that you’ve been responsible with your finances and have timely repaid your debts in the past.
If you don’t have a credit score yet, or if your score is below 680, you may still be able to get a construction loan by providing other documentation demonstrating that you’re a good risk for lending money. For example, you may be able to show that you have a strong income and/or savings history.
A:There is no one definitive answer to this question. The amount of a construction loan that you can qualify for will depend on a number of factors, including your credit score, the value of the property you are looking to build on, and the amount of money you have saved for down payment.
That said, most lenders will be willing to give you a loan worth up to 80% of the total value of the property. So if you are looking to build a home that is worth $200,000, you could expect to receive a loan worth up to $160,000. Keep in mind, though, that the interest rates on construction loans tend to be higher than those on traditional mortgage loans.
Make sure to speak with us to see if you qualify.