State the project and the funding gap
Separate the construction agreement, professional services, owner purchases, reserves, and costs already paid. List when each remaining payment is expected and the amount of owner funds available for that stage.
Ask how the product works
A construction loan and a home equity line of credit are different borrowing arrangements. The CFPB describes construction loans as commonly advancing funds during construction and HELOCs as revolving credit against home equity. Ask lenders to explain the terms of the specific offer.
Compare more than a rate
- Fees, rate changes, repayment timing, and total borrowing cost.
- Security or collateral requirements and consequences of missed payments.
- Conditions for releasing money and approving project changes.
- What happens if construction is delayed or the budget changes.
- Whether a new application or refinancing is needed at completion.