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Types of Construction Loans

There are several types of construction loans to consider, each with its unique features and benefits:

• Construction-to-Permanent Loans: These loans convert to a traditional mortgage once construction is complete, offering a seamless transition and potentially lower interest rates.
• Stand-Alone Construction Loans: These are short-term loans that cover the construction phase. Once the home is built, you'll need to secure a separate mortgage to pay off the construction loan.
• Renovation Construction Loans: Ideal for major home renovations, these loans provide funds based on the home's expected value after improvements.

Each type offers distinct advantages, and understanding these can help you make informed decisions. For instance, construction-to-permanent loans streamline the process by eliminating the need for two separate closings, which can save time and money.