State Savings Bank

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What is the loan structure of a construction loan?

Construction loans are ‘closed-end lines of credit,’ meaning you advance money off the loan as you build the house.  It is not a revolving line of credit like a credit card where you advance off the line, pay it down, and then advance off the line again.  Payments on the construction loan are monthly interest only, so at the beginning of the loan you pay a smaller amount of interest than you do at the end when you have more money drawn off the line.

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