If you are intending to build a new property versus buying a resale, it is helpful to understand the financing solutions available. Financing new homes is very different from financing an older one. The terms, rates, and process may differ. Below are some common new construction financing solutions in MA.

Construction Loans

Construction loans are short-term mortgages that dispense necessary funds during the construction process. There is usually a schedule for when funds are released and in particular amounts. Particular goals must be met for release of funds to the builder. The costs, interest charges, and other terms will differ by mortgage company. Construction loans are treated as risky, thus conditions are typically more strict than other mortgage programs. Upon completion of the construction period, a new loan must be obtained.

Convertible Loans

Construction to permanent loans involve a single closing. While the home is being built, interest-only charges are usually due. Once construction is completed, the loan transforms into a typical mortgage with regular mortgage payments. Interest rates are typically set when construction starts, although the rate lock for the permanent part of the loan may have a deadline. If your home is delayed, then the interest rate for the permanent loan may adjust.

Builder Financed for New Construction

This is the easiest option for a home buyer because no additional loan is required by the home buyer. Home buyers are normally asked to submit a significant deposit and to pay for upgrades during construction. Buyers must obtain a loan at closing.

New Construction Financing Solutions In MA

Financing solutions on the market may be based on if you own the lot or the builder does. Lots that you own ordinarily need a construction loan of some type. Builder financing is commonly available within new subdivisions. Options will also vary by mortgage company as some have unique options. Connect with a loan officer to learn all of the different new construction financing solutions in MA and related costs prior to making a decision.