Building a new home in can be an exciting prospect – unless you get caught up in a construction loan approval process that’s overly complicated and time-consuming. With this loan, MCF Mortgage can finance up to 90% of the cost of the land plus the costs of construction with either a one-time fixed rate or traditional ARM product.
This type of loan is used to finance the construction of a home. It may or may not include the purchase of the land upon which the home is to be built. Unlike a mortgage loan where the entire amount of the loan is disbursed to the borrower at the time the loan transaction is consummated, a construction loan involves a series of disbursements, which are linked to a construction schedule.
Some construction loans automatically convert to a regular mortgage (referred to as “permanent” financing) once construction has been completed, while others require another loan transaction to take place so the borrower can pay off the construction loan and obtain permanent financing.