New Construction Loans
This type of specialty loan makes up a very small percentage of home loans in the U.S., but they do exist. These are generally short term arrangements, less than one year and are intended to help bridge the time gap needed to build a new home. When a buyer makes a plan with their builder, they will sometimes enter into a new construction loan so that building can begin. Once the home is completed and the buyer takes possession, they will move in and the loan will be converted into a standard mortgage or possibly a Private money loan if that is what the buyer decides to pursue. Some builders will "carry the note" meaning they will provide the home loan financing in house and work out the arrangements with the buyer directly. This can come with a higher interest rate than other standard loans but buyers who need special financing because of a negative credit history or difficulty proving their income, this kind of arrangement can work well. Builders like it because they know they have a buyer for their new construction and they also usually retain the right to sell the home if payments are not made.
This type of specialty loan makes up a very small percentage of home loans in the U.S., but they do exist. These are generally short term arrangements, less than one year and are intended to help bridge the time gap needed to build a new home. When a buyer makes a plan with their builder, they will sometimes enter into a new construction loan so that building can begin. Once the home is completed and the buyer takes possession, they will move in and the loan will be converted into a standard mortgage or possibly a Private money loan if that is what the buyer decides to pursue. Some builders will "carry the note" meaning they will provide the home loan financing in house and work out the arrangements with the buyer directly. This can come with a higher interest rate than other standard loans but buyers who need special financing because of a negative credit history or difficulty proving their income, this kind of arrangement can work well. Builders like it because they know they have a buyer for their new construction and they also usually retain the right to sell the home if payments are not made.
