How Does a Construction Loan Work?

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Nate Davis from a company called Florida Mortgage Firm, has presented a video in which he talks about construction loans and clarifies how they work. He has done this to ensure that the video clears up misunderstandings the public has about construction loans, to explain how these loans differ in category, and to highlight the benefits concerned.

There is a misconception among the public, that construction loans are when people buy homes from builders who do the construction concerned.


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As the finances for these homes will be covered by end loans these are not true construction loans.

One category of construction loans is a standard loan, when people borrow money from banks to cover the costs of their newly constructed homes and pay the money back at fixed or adjusted rates. Another category is a construction permanent loan which has significant benefits. An example of these is this type of loan will enable people to buy land and build on it, build on their own land or build on gifted land. Additionally, this loan can be used to pay off a current land loan.

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