Construction Loans Provide Short-Term Financing Options for New Home Builds

If it is your dream to custom-design and build your own home or are interested in building a home to sell, construction loans provide you with short-term financing options that cover construction costs necessary during the process of building. Typically, once the construction is complete, the construction loan will be converted to or replaced by a conventional mortgage.

Midland Mortgage Corporation can provide the construction loan or work with you to convert or refinance a current construction loan when you have finished building your home. When helping you to obtain a construction loan, we’ll carefully consider your situation to learn the reason why you are planning to build and help you to obtain the type of construction loan to meet your needs and goals.

If the build is complete, and you just need your construction loan to be converted or replaced, we have a variety of conventional home loan and refinancing loan products to make the transition smooth, so you can move on with the process and enjoy your dream home.

Types of Construction Loans

There are three primary types of construction loans to consider for your home build:

Construction Only—these loans are typically short-term and will be converted or replaced by a traditional mortgage upon project completion. The actual building process of the home is financed, but then the borrower will need to find a lender (or use the same lender if possible) to take-over or replace the construction only loan.

 

Construction-to-Permanent—these loans have a built-in conversion, taking the construction loan into a standard loan by the same lender when the borrower has obtained the certificate of occupancy. This construction loan option is a time-saver as well as a money-saver, because the borrower must only complete a mortgage application and go through the closing process one time.

 

Rate Lock—with a rate lock construction loan, you can lock-in the mortgage rate for a maximum of one year during the home construction process. This option allows you to avoid increasing interest rates.