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What are Remodel Construction Loans?

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If you are looking for construction loans for remodel, you can apply to a mortgage broker. An average mortgage broker will provide you with more than 200 of possible loan programs. Brokers are one of many lenders, who are ready to offer construction remodel loans.

Initially, you have three main sources of financing: banks, credit unions, and brokers. The Federal Housing Administration (FHA) or Veterans Administration (VA) provide this option. Lenders can purchase loans from Fannie Mae and Freddie Mac – two corporations launched by the Congress for that purpose. If you have an outstanding credit, then you will face the lowest interest rates.

You can consider the help of the home-equity loans. They attract borrowers with tax benefits, as they have no closing costs. You get the whole sum and pay it back during 15-30 years. The interest rates are mostly fixed but they are higher than aforementioned options.

The next variant for those, who look for construction loans for remodeling, is home-equity lines of credits. They work the same way the credit cards work and their interest rates are quite affordable. The interest is usually fixed and depends on the prime rate (remodel construction loans are a second mortgage after a mortgage for the home).

This is a brief scheme of how do construction remodel loans work.