Southern California Construction Loans

Written by Stephanie Dula
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The southern California real estate market is a wise choice when it comes to deciding on a location in which to construct a home or commercial building. The area boasts several of America's largest cities, including Los Angeles and San Diego, which provide a strong economic base to the area. The stunning geography of southern California makes it appealing for a diverse group of prospective landowners.

Types of Construction Loans

When applying for a construction loan in southern California, it is up to the borrower to find out all current interest rates and relevant information to avoid getting overcharged. There are two major types of construction loans available on the market: construction-only loans and construction-to-permanent loans. Both have their pros and cons, and it's important to research each thoroughly to determine which is best for each individual situation.

Construction-to-permanent loans offer less hassle since they only involve one set of application, approval, and closing processes. Upon completion of construction, loans will automatically rollover into a more traditional mortgage loan. Many borrowers prefer this approach rather than jumping through all the hoops involved in applying for a loan again when construction is complete.

A construction-only loan may be better for those who feel they can obtain a better deal by securing two separate loans. Once the construction loan has ended, they will need to convert to a new mortgage loan. Borrowers who choose this path hope to save money by shopping around for both portions of the loan program. Individuals looking to build property in southern California can research both programs extensively online before deciding which is best.

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