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Home Loan Mortgage is your local source to learn about and obtain a construction loan to build or remodel your home in Colorado. Whether you're a builder looking to build a pre-sold or spec or a homeowner building or remodeling your dream home, we can help! Our 40 years of experience in the industry and over $800,000,000 in residential construction loans closed has made us a leader in construction and remodel financing on the Front Range.
Construction loans are different from traditional mortgage loans in that they can be used to finance the building of a custom home that many products don’t cover. Most construction loans require interest only payments during the building period, and similar to a credit card, you only pay for what you use. Typically, construction loans have an "interest reserve" built in the loan. Monthly interest is drawn from this account until depleted. You can still pay the monthly interest out of pocket, which will decrease your overall long-term mortgage.
A construction loan can also be used to remodel a home. Banks will obtain an appraisal based off “plans and specs” – this means a value after completion. This allows you to borrower more than you would from a Home Equity Loan or Home Equity Line of Credit, because you are typically borrowing more than the home’s current value.
Generally, construction rates are quoted on a prime (usually the Wall Street Journal Prime rate) plus basis with a “floor rate”. This means your interest rate is the prime interest rate plus a certain spread. If the Prime Rate increases, your payments will increase.
We also can finance land. If you want to purchase a lot and wait to build, we can offer competitive financing.
Have questions about mortgage loans? Call us at (303) 931-3239 or e-mail us at email@example.com. We answer questions about different types of loans every day.