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ABCs OF CONSTRUCTION LOANS

January 27, 2024

Unlock Your Dream Home: Building in Gulfport’s Oak Landing Made Easy with Construction Loans!

Crafting your dream home in Gulfport‘s enchanting Oak Landing community is more attainable than you might think. Homebuilding isn’t exclusive to the wealthy; it’s within reach with the help of a construction loan.

Understanding Construction Loans:

Construction loans are temporary, higher-interest-rate mortgages designed to cover the expenses of building or renovating a home. The buyer qualifies for the final mortgage, and the lender disburses funds to the contractor following a pre-approved schedule. Once construction concludes, the loan seamlessly transitions into a traditional home loan.

Types of Construction Loans:

1. Construction to Permanent: Converts to a permanent loan with a locked-in interest rate at closing.
2. Construction Only: Requires repayment upon project completion, necessitating new financing for the borrower.
3. Renovation Construction Loan: Includes renovation costs in the original mortgage, based on the home’s post-upgrade value. Ideal for purchasing a fixer-upper property.

Components Covered by the Loan:

A construction loan typically covers the following:

• Land
• Labor and materials
• Plans, permits, and fees
• Contingency reserves for unforeseen changes and delays

Qualification Considerations: 

While all mortgages have minimum approval requirements, construction loans pose additional risks for lenders due to the absence of existing collateral (the home). Besides standard criteria like debt-to-income limits and FICO score minimums, lenders often request a higher down payment (typically 30%) and a clear repayment plan at the project’s conclusion (proof of cash or loan).

Advantages of Building from Scratch:

Building from the ground up provides numerous benefits, including the allure of a blank canvas. Even the average consumer can transform their dream home into reality by leveraging a construction loan. To explore mortgage options and determine eligibility, reach out to a lender. Don Blaize, one of our preferred lenders, specializes in assisting individuals seeking mortgage solutions for their new homes on the Mississippi Gulf Coast. Include him in your search for the perfect financing option tailored to your needs.

Don Blaize – CMG Financial
Area Sales Manager / Loan Officer
NMLS 184888 | Branch NMLS No. 1594850
Mobile: (228) 493-0313
dblaize@cmgfi.com
cmgfi.com/mysite/Don-Blaize
925 Tommy Munro Drive | Biloxi, MS 39532

Categorized in: Home Building Info

This post was written by Acadian Homes