Construction Loans: Types & Options for Building Your Dream Home

If you are interested in a construction loan, there are a few different options that you will have in front of you. Here are the construction loan options that you will be able to choose from.

Two Closings

One of the most common types of construction loans involves two closings. You are going to close one loan in order to begin the construction process. The lender is going to give you a draw as your builder needs more money. Typically, there will be four different payments from the lender for this type of loan. Once the building is constructed, you will have to get a traditional mortgage loan in order to pay off the first loan.

Single Closing

Another option that has become popular in recent years is the single closing loan. The lender is going to give you the money that you need in order to build the property. After the property is built, the lender is going to convert the loan into a traditional mortgage loan. In this way, you are going to be able to avoid paying closing costs on two different loans.