Second, since you will be making payments on the loan for many years, those payment will be made in dollars whose value is inflated as time goes on, instead of today's dollars. Third, you are gambling that interest rates won't drop and you won't refinance before the rate advantage of paying points has given you, begins to pay off. Finally, when refinancing, your options for deducting the points as interest may be complex and confusing. The typical financing for new home construction is a short term loan for the duration of the construction period. Draws on the loan are made as needed, typically one draw per month.
Most builders require three to four draws which are defined in the construction contract.
Loan payment during this time includes only the interest that accrues as amounts are drawn. The borrower is billed for interest on a monthly basis. Once construction is complete, the owner will refinance into a longer term loan and begin repayment. There are many programs available today to purchase a home with a very low down payment. These programs allow both first time home buyers and those looking for a larger and more expensive home to buy a house without needing a lot of money to close.