Understanding A Construction Loan
A Construction Loan is a much different loan than a regular mortgage. When you add an off-site structure into the mix it is beneficial to fully educate yourself as to what financing is needed and how it works.
- The interest rate for a construction loan is usually higher than a long term mortgage. Don’t let this deter you from the project. It is a short term loan and you only pay interest on the money you have drawn.
- The construction loan is established around your construction budget with all of the construction costs precisely budgeted. Upon completion of a certain stage of construction (ie. Foundation) the bank with release the funds to pay that stage of construction. This helps protect you against a shortage of funds at the end of the construction phase.
- Upon completion of the project the construction loan is paid off with the long term mortgage.
- Very few construction loans will provide 100% financing, so be prepared to have a down payment and other costs.
- Irontown Homes will work with your loan officer directly as a the modular construction industry is a specialized lending field and many factors must be discussed to make the loan work properly. Our Finance Coordinators are available to help you with this process and prefer to be involved from the beginning.
Irontown’s In Factory Financing Terms
- Initial Draw – 25% of modular portion
- 4-Way Completion Draw – 25% of modular portion
- Paint Completion Draw – 25% of modular portion
- Final Inspection in the Factory Draw – 25% of modular portion
