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Construction loans make building Your Dream Home surprisingly easy and affordable.
What are construction home loans?
Navigating the realm of construction financing may seem daunting, but rest assured, our Great Falls Office is here to demystify the process. In this comprehensive guide, we’ll walk you through the ins and outs of construction loans, ensuring you have a firm grasp on the fundamentals before embarking on your construction journey. Our Great Falls Office is dedicated to assisting you every step of the way, from understanding the basics to securing the right loan for your unique needs. With the right knowledge and guidance, you can turn your construction dreams into reality.
Not sure where to get started? That's okay too, we're happy to meet you where you're at and direct you to the right place or person.
The MannMade construction loan process.
Construction loans are short-term loans specifically designed to fund the construction or renovation of a property. They differ from traditional mortgages and are typically interest-only during the construction phase.
There are two primary types: construction-to-permanent loans, which convert into a traditional mortgage after construction, and standalone construction loans, which require refinancing after the project’s completion.
Lenders disburse funds in installments as construction progresses, with interest accruing only on the amount drawn. Once construction is complete, the loan transitions into a conventional mortgage.
Lenders evaluate factors such as credit history, income, and the project’s feasibility when determining eligibility. Extensive documentation, including detailed construction plans, is typically required.
Interest rates for construction loans tend to be higher than standard mortgages. Repayment options vary, with some lenders offering interest-only payments during construction and others requiring full monthly payments.
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Yes, construction loans can finance not only new construction but also significant renovations or additions to an existing property. However, the scope of the project and its impact on the property’s value will be considered during the loan approval process.
If unforeseen costs arise during construction, you may need additional financing. Discuss this possibility with your lender beforehand and consider a contingency plan to cover unexpected expenses.
The approval process can take several weeks due to the extensive documentation required. To expedite approval, ensure you have a well-defined construction plan and meet all eligibility criteria.
In most cases, you can choose your contractor or builder, but they must meet certain qualifications set by the lender. Your Great Falls Office can provide guidance on this matter.
After construction concludes, your loan transitions into a traditional mortgage, and you start making regular monthly payments, including principal and interest. This phase is known as the “permanent phase” of the loan.
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