Construction home loan

A construction home loan is quite different than a permanent mortgage loan assumed by a homeowner. Construction home loans are notes assumed by homeowners who are planning to build a new house and need funds to get the project under way. Since these notes are 'story' loans, that is, the lender must know the plans or story of the building project, these primary home loans are only for a certain period of time and only charge interest. Usually this agreement is among the prospective homeowner, contractor and lender as to time frame of building and line of credit.