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A custom construction loan is used to buy land on which to build a home and then to build the home. Before closing, these loans require that you have selected the contractor to build the home and that you have plans and specifications for the new home. Loan terms are available for 6-18 months.
The most common custom construction loan automatically converts to a permanent loan , such as a 30 year fixed rate loan, at the end of the construction period. Rates can be fixed or variable during the construction period and payments can usually be built into the loan amount, so that you don’t have double mortgage payments during the construction term.
Learn about other loan types...
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