Updated almost 8 years ago on . Most recent reply
Construction loans converted to conventional mortgage loans
I had an investor share with me today that he uses a construction loan to purchase and rehab his properties and then converts these to a conventional mortgage. He stated he can get the construction loan for 20% down at 5% interest only each month. The kicker that I can't figure out is that he says he gets back his 20% down payment made to get the construction loan when he changes over to the conventional mortgage loan? How is he getting back his down payment for the construction from the proceeds of the mortgage loan? We are talking about a 34k purchase with an additional 8k for repairs. Total construction loan $42k.