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What Is a Construction Loan: Purpose and Process

By Catherine BrockUpdated Dec 26, 2024 at 12:28 PM

Key Points

  • A construction loan is short-term financing that funds a new home or commercial property development.
  • Standalone construction loans are repaid within 12-18 months, while construction-to-permanent loans convert to a traditional mortgage.
  • Alternatively, property owners can finance construction with home equity from another property, personal loans, or cash.

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