Learning about a Construction Loan
Construction loans are quite different from a standard mortgage. When you are planning on moving a prefabricated home onto the site it is essential to know what specific financing options are available, how they work, and which one is best for your home.
- Construction loans have a higher interest rate than standard mortgages. The loan is short term and only requires you to pay interest on the money you used.
- It is a budgeted loan that needs a specific construction budget before it can be established. The budget is broken down into stages, such as the foundation, and the bank delivers the needed funds once a stage is completed. This system helps avoid fund shortages as you build your home.
- The construction loan is paid in conjunction with the mortgage once your home is completed.
- Often the building process will still require you to pay some costs out of your pocket, because most construction loans will not cover every expense.
- Certain construction loans will provide a small down payment to a factory and will provide the complete amount once the home is delivered. Unfortunately it is difficult for Irontown to resell our completely custom homes, so we have outlined specific financing terms for our projects. With construction loans of this nature an interim financing company can be used to fill in the gap.
Financing Terms for Irontown
- First draw – 25% of modular amount
- Draw for 4-way completion – 25% of modular amount
- Draw for completion of paint – 25% of modular amount
- Draw for ending inspection at the factory – 25% of modular amount
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