If building your own home has always been a lifelong dream, we can make it possible with a construction loan at Priva Mortgage! This specialty financing product provides you with the funds to build your home and convert it to a mortgage when the home is ready to live in!
A construction loan is a loan meant to finance building the home, but not living in it. A construction loan is short-term, and the full amount is due within a few months to a few years depending on your loan term.
After the home is constructed, you must convert the construction loan into a permanent loan (mortgage) by refinancing it. We also offer a single-close option that offers the construction loan and mortgage in one loan.
Construction loans don’t have any collateral since the home isn’t built yet. Because of this, the rates are higher than a traditional mortgage to make up for the risk.
If you’re approved, we’ll set up a disbursement schedule with the contractor based on the architectural plans and various phases. Upon inspection of work completion, we’ll disburse the necessary funds allowing the contractor to move onto he next phase.
Once the construction is completed, you’ll either need to refinance the construction loan with a traditional mortgage or if you used the single-close option, your loan will convert to a mortgage right away.
Because of their higher risk, construction loans require:
During the building process, you’ll make interest-only payments on the funds withdrawn. This allows you enough money to cover your housing expenses while you wait for your house to be built, but you must prove you can afford both the interest payments on the construction loan and your current housing costs.
Construction loans can cover a variety of things including the following:
If you already own the land, you can use it as collateral to lower your loan’s risk and potentially get a lower interest rate or to improve your chances of qualifying.
Not everyone needs a construction loan, even if you’re building a new house. If you’re buying a ‘cookie cutter home’ where the builder finances the cost of building the house, you only need a mortgage when the occupancy certificate is established.
If you’re financing the building of the house, though, a construction loan is necessary to build the home
If you want to build your dream home, let Priva Mortgage help. We offer a wide variety of options for a construction loan allowing you to build your dream home at costs you can afford.
We’ll walk you through each step and make building your own home as seamless as possible!