Finance services

Mortgage and Construction Loans

At Sedna Urban Development, we offer a comprehensive financial services to assist you with:

- Arranging first and second mortgages - Construction loans

Frequently Asked Questions (FAQs)

1. What is a first mortgage?

A first mortgage is the primary loan taken out on a property, which has priority over all other liens or claims in the event of a foreclosure.

2. What is a second mortgage?

A second mortgage is an additional loan taken out on a property that is already mortgaged. It is subordinate to the first mortgage, meaning it will be paid off after the first mortgage in the event of a foreclosure.

3. What is a construction loan?

A construction loan is a short-term loan used to finance the building or renovation of a home or other real estate project. The funds are usually disbursed in stages as the construction progresses.

4. How do I qualify for a construction loan?

To qualify for a construction loan, you typically need a good credit score, a low debt-to-income ratio, and detailed plans for the construction project, including costs and timelines.

5. What is the difference between a first mortgage and a second mortgage?

The main difference is their priority in the event of a foreclosure. A first mortgage has priority and will be paid off first, while a second mortgage is subordinate and will be paid off after the first mortgage.

6. Can I use a second mortgage for home improvements?

Yes, a second mortgage can be used for various purposes, including home improvements, debt consolidation, or other significant expenses.

7. What are the typical interest rates for construction loans?

Interest rates for construction loans can vary based on the lender, the borrower’s credit profile, and market conditions. They are generally higher than standard mortgage rates due to the increased risk.

8. How is a construction loan disbursed?

Construction loans are usually disbursed in installments, called draws, based on the progress of the construction. The borrower submits draw requests to the lender to release funds as different phases of the project are completed.

9. What happens when the construction is complete?

Once construction is complete, the construction loan is typically converted into a permanent mortgage, also known as an "end loan," which the borrower repays over a set term.

10. What documents are needed to apply for a mortgage or construction loan?

Commonly required documents include proof of income, tax returns, credit reports, a detailed construction plan (for construction loans), and information about existing debts and assets.