My lender has offered me a 3-month construction loan. Small wood homes can go from foundation to escrow closing in less than three weeks, but this is rare. Before signing this loan, talk with some contractors to see what's reasonable. Remember that bad weather, permit problems, inspection delays and other issues can seriously postpone work schedules. I've been offered a construction loan with a lower interest rate if I pay points up front.
Construction loans are short-term financing, so points paid in advance are usually a waste of money.
Be sure to ask about workman's compensation insurance, completion bonds and liability coverage. The building inspectors should catch items not up to code. Even so, it's a good idea to hire a private home inspector to keep an eye on the construction progress. Inspectors can check the house once the foundation is in place, when the framing is done, and finally, when the home is completed. EasierHomeLoans does not make loans or credit decisions.