- Before your transaction, contact an SMCH preferred lender to learn about construction loans
- How a construction loan (or construction-to-perm loan) typically works:
- A construction loan is a line of credit and you only pay interest on the portion you’re using
- Once you find a vacant lot or tear-down property, you’ll make your first draw on the loan to finance the land. If you’re tearing down your existing home, you use this draw to pay off your current mortgage.
- The second draw is made when you begin building your home. SMCH makes draw requests to your lender at various stages of the home’s completion, e.g. when the home is under roof.
- Once your home is completed, the lender will convert your loan to permanent financing, e.g. in the form of a 15-year mortgage
John Jorgenson of Long & Foster is the exclusive agent for Stanley Martin Custom Homes.