How do construction loans work?
Asked by Wendy Jean
I understand you take draws on the materials and labor used, and only pay the interest on the money you have spent. Then in a year, or once construction is complete, it rolls into a mortgage loan. But are there closing cost associated with this?

Best Answer:
all costs are included when you first draw and sign the documents, they usally have loans as low as 1% interest until building is complete, they will also lock you into a rate based on the current rate index, so when your home is complete you just move right in there will be no more costs applied (unless otherwise noted by the builder/bank)

Yes there are closing costs when it rolls into a mortgage.
Answered by daisy

There are different loans, available, for different purposes. I.E. Original, repair,rehabilitate ( rehab.,akin to up dates)updating, additions,etc. Al tho these will fall under the general terminology's of ; new construction, interim, hard money, & / or mortgage. You should speak with an experienced home loan officer and tell him / her exactly of your intentions. GO TO AT LEAST 3 DIFFERANT LOAN OPERATIONS !!! Uncle Wil
Answered by Lonnal W