A construction loan is not like a typical mortgage loan for building a house or a building for a business. A construction loan offers the borrower the opportunity to build the home of their dreams, but it does come with a cost.
First, loans made for the construction of a home require an excellent credit rating and require a higher down payment. These loans also have a higher interest rate. Construction loans are risky and difficult to obtain due to the fact the there is little collateral because the home is not yet built.
Loans for new construction, rehabilitation, as well as restorations con be obtained if the proper research into cost and completion dates are done. It’s also crucial to find a reputable contractor who has a good track record of completing homes and projects on time and within the specified budget.