A construction loan is a short-term loan used to finance the building or renovation of a home or other real estate project that covers the cost of the project before the builder obtains long-term.
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Should the Builder Finance Construction? – The Mortgage Professor – See Pitfalls in the Financing of Home Construction. You have assurance that the builder has sufficient financial capacity to do the job. A builder paying interest on a construction loan has an incentive to get the job done as quickly as possible.
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