Constructing a home can be expensive, but with a construction loan, all expenses are catered for. A construction loan is short-term financing that you can use to build a house from start to finish. It covers land purchase, construction materials and labor, contingency and interest reserves, plans, fees, permits, and closing costs. Here are five things you should know before taking out a construction loan.

1. How construction loans work
Construction loans have more lender involvement. With the help of a construction fund control specialist like Northwest Construction Control, the lender analyzes your projected budget, plans, and schedule to determine your loan amount. Once your loan is approved, you don?t receive the money; instead, the lender pays the contractor in intervals based on completed work. Before releasing a draw, the lender reviews the construction progress report to ascertain that the amount spent aligns with completed work. Once the project is completed, you start repaying your loan. You may convert it into a conventional mortgage or repay your construction loan off in full.
2. Types of construction loans
Depending on your construction needs, there are various loans to choose from. They include:
– Construction to permanent loan: This loan covers a home construction then converts into a fixed-rate mortgage after the project’s completion

– Construction only loan: this is an adjustable-rate loan used to complete the construction of a home, and...