what are the interest rates on construction loans?

Asked by Lauren, Hoboken, NJ Mon Apr 7, 2008

how long is usually the length of a construction loan. i need to do work before I move in?

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Mariyaluci, Home Buyer, South Miami, FL
Fri Sep 9, 2016
Due to the U.S. economy and the existing home inventory in the banks portfolios over the last few years, U.S. banks were only offering purchase mortgages.

Cautiously, banks are beginning to offer occasional programs which will finally offer Foreign Nationals the possibility of building their own individual dream house on their own property.

Regarding the credit check, processing and credit models there are significant differences when it comes to each individual mortgage.

1 vote
, ,
Tue Jun 14, 2016
Hello everyone i can help with a loan at good rates.
Web Reference:  http://www.geraldhenning.com
0 votes
Alex Reinig, , Pittsburgh, PA
Fri Feb 6, 2015
Feel free to contact me directly- Here is a snapshot to Construction loans we offer:
Rates are typically current day and can be locked in for the whole construction for free. take advantage of the low rates now. Most places would charge to lock in now.

-CTP loans can be on Primary Residences and 2nd Homes for ground up construction, lot acquisitions, tear down, renovations/additions, modular homes, log home , stick built homes with loan amounts up to $2.0MM.
- We "do not" qualify the builder, we quailfy the client. Builders LOVE this!!

Key Points
1. This is a Citizens Bank portfolio product, we can finance up to 90% loan to value of the entire project. This is point is usually the one your clients will appreciate! At this point in time Citizens is one of the only lenders that will loan on a 90% LTV with NO MI!!!

2. The construction loan is a true “One Time Close” with the first 12 months payment being interest only during construction for the borrower. When construction is complete the loan modifies to a fully amortized loan with principal and interest payments. Borrowers retain the ability to further modify the loan if they have additional savings or down monies at the time of the home completion/modification (Ex. Sale of an existing home mid or even post construction). To reiterate; there is no need for duplicate closings, even in the previous example.

3. Closing costs for the borrower are the standard closing costs for a mortgage, purchase or refinance. The only additional fees that would be typical to the client would be the costs to pay for the draws and final inspection.

4. In case were we need a custom draw schedule Citizens may accommodate per the contract guidelines set forth and approved.

5. As the Builder you can get up to a 10% Advance draw at the construction loan closing for start up funds.

6. Curb side funding is available and we typically wire the monies into your account direct.

7. No long term rate locks are needed, we can lock the borrowers at application! This rate translates to both construction and perm loans, keeping it simple!

8. CTP loans can be on Primary Residences and 2nd Homes for ground up construction, lot acquisitions, tear down, renovations/additions, modular homes, log home , stick built homes with loan amounts up to $2.0MM.

9. Final and most important for the site GC/builder! Citizens Bank has limited to no Paperwork, no credit checks, no financials. Citizens does require a disbursement schedule to be in the contract and/or provided and does require a copy of a license and insurance needed for the state you are building in (if applicable.) This fact alone makes this a fairly simple process for our builders in our network.

Alex Reinig
Sales Manager- 412-889-3310
0 votes
Are you still doing loans? I'll contact you through email if so. thanks
Flag Wed Feb 8, 2017
Are you still doing loans?
I'm a licensed engineer with development and landlord/real estate experience. I'm ooking at a fully entitled property for purchase.
I'd purchase for about $917k.
Construction costs for 8 rental units would be about $1.75Mil.
Is the land with no debt enough equity for the loan?
What current rates are available for a one time close on this amount?
Flag Wed Jul 20, 2016
Michael Camp…, , Entire U.S.
Sun Jun 1, 2008
There are many variables on this. Email me directly at NJMortgages@gmail.com or call 908-868-2021 and I can help you.
0 votes
Martha McDon…, Agent, Summit, NJ
Tue Apr 29, 2008
What is have recently learned is that banks are being VERY selective to whom they loan money. With that being said, the interest rate is based on the following: the characteristics of the property (location, condition and type), over all qualifications of ALL parties involved (your credit and assets) and track record with like ventures (experience). A bank may publish a rate but they may not be able to give you the same rate, the underwriters determine this. Because of this, some are people are looking to hedge funds for private financing. Martha McDonnell Coldwell Banker Summit NJ
Web Reference:  http://www.Summit-NJ.com
0 votes
Christine Be…, , 19465
Mon Apr 7, 2008
The interest rates for a construction loan should be less than .5% above the going refinance rates.
Between the higher fees, as Christopher mentioned, than run maybe $1,000 total (inspections for draws, etc) and the higher rate over the life of the loan, plus paying for a house to be built while you are not able to live there, it does cost significantly more to build your own home than to buy an existing one.

For many people they pay the higher rate/fees so they can build the exact house they want.

Christine Bell
0 votes
Corey Grushin, Agent, East Brunswick, NJ
Mon Apr 7, 2008
Lauren a rehab loan or construction loan are usually one and the same product, but their are different programs. The interest rates for a one lose construction loan usaully run 1% higher than a standard mortgage rate, so today they are running at 7%, thjis would be a 30 year loan giving you up to 9 months to complete the construction.
There are also two close loans. The construction part would be an interest only loan usually prime plus 1 or 2%. You again would choose a 3, 6, 9 or 12 month period to get the construction done. (the bank would also tell you about how much time you will get) SOme of the fees are based off the length of time for the construction. After the construction is complete you would then close on a a trditional mortgage with a whole new set of closing costs at market interest rates. All construction loans have higher fees associated with them than a traditional mortgage.
If you have further questions Lauren just post it here & I'll get back to you.
0 votes
Sandy Shores, Agent, Melbourne, FL
Mon Apr 7, 2008

If looking for construction loan info you may want to start at http://www.bankrate.com/brm/news/mtg/20020515c.asp. There is a construction loan guide. This may help you determine if a construction loan is what you're looking for.

You may have to contact a local lender to the area you in to get rates. They can also help you determine what type of loan will suit your needs.

Good luck,
Sandy Shores
0 votes
Christopher…, Agent, Spring City, PA
Mon Apr 7, 2008
I am not sure you need a construction loan, but perhaps a rehab loan? The loans will be higher, in the 8-14% range, and may or may not have upfront points. Contact a good local broker who can listen to your needs and poiint you in the right direction.
0 votes
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