Get answers, and share your insights and experience.. Do you need a loan to start a nice Small Scale and medium. Construction Loan
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Construction loans are similar to a line of credit because you only receive the amount you need to complete each portion of a project. With construction loans, you only pay interest on the amount borrowed (as opposed to a standard loan, where you take 100% of the money available up front and start paying interest on the entire balance immediately).
· Generally with a 644 credit score you can find a lender who will do a 90% L.T.C. [loan to cost] loan for the home building cost and the land it’s on. It will be a short term 6-9 month loan and you will need a new mortgage after the construction is complete.
It is also possible to obtain an FHA or VA construction loan, which would have lower down payment and credit score requirements, but these.
The Construction Loan Rate. With a construction loan, as with all other loans, you must pay interest on the money you borrow. Typically, construction loans are variable rate loans, and the rate is set at a "spread" to the prime rate. Essentially, this means that the interest rate is equal to prime plus a certain amount.