Construction loans are short term interim loans used to build or renovate a home. These loans typically act as a line of credit enabling the borrower to disburse money to a builder as the building project proceeds. Generally, the borrower pays interest only on the money as the money is drawn. In most cases, the borrower will secure a permanent loan at the same time which will be used to pay off the final balance of the construction loan once the home is complete and a CO (Certificate of Occupancy) is issued.
