How does a construction loan work and what is it?
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Construction loans are a temporary loan that pays the builder during the construction process. At the completion of the build process, a permanent loan (typically a 20 or 30 year mortgage) pays off the construction loan.
There are two scenarios on the construction loan. Sharp Homes can take out the construction loan and charge a financing fee. That is a very common practice, especially if the purchaser has an existing mortgage. This option has a higher initial down payment to Sharp Homes, due at contract signing.
The other scenario is for the purchaser to take out the construction loan, and they would pay the interest monthly during the build. We can assist you in obtaining a construction loan if necessary. This option has a lower initial down payment to Sharp Homes, due at contract signing.
