There are two types of construction loans. A One-time close construction program is a combination of a long term loan, and a construction loan with one closing. The loan is closed before construction can begin. A Construction Rider is attached to the Note during the construction phase, which states the terms of the construction loan. At the end of the construction term, this Construction Rider dissolves and the mortgage becomes a fully amortizing loan.
A Two-time close involves a closing prior to construction and a second closing to refinance your construction loan into permanent financing. Be sure to investigate thoroughly to decide which program best suits your needs.
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