Finding and securing a home construction loan is one of the biggest hurdles in building a custom home. They’re somewhat different from other loan types and, historically, it can be difficult to find information about them online. But not anymore, thanks to the folks at Bankrate.com:

Construction loans are typically short term with a maximum of one year and have variable rates that move up and down with the prime rate. The rates on this type of loan are higher than rates on permanent mortgage loans. To gain approval, the lender will need to see a construction timetable, detailed plans and a realistic budget, sometimes called the “story” behind the loan.
Once approved, the borrower will be put on a bank-draft, or draw, schedule that follows the project’s construction stages and will typically be expected to make only interest payments during construction. As funds are requested, the lender will usually send someone to check on the job’s progress.

The quoted article covers quite a few points in a relatively short space. So if you’re looking to build a new home and financing is a concern, be sure to click through. Read More At Bankrate.com