Building a House – vocab quiz

What are the most important words you need to know if you’re thinking of building a house?  Lets start with these three: turn key, end loan and construction loan.

Turn key: this is when a builder builds a house for you on a piece of land and when the house is 100% complete you buy the finished product.  The term “turn key” means all you need to do is put the key in the lock and open the door to your new home.   Ha ha!   So maybe it’s not that simple as there are lots of decisions that are made on the lot, the floor plan/design, flooring, cabinetry, etc.   But from a financing point of view, you get approved for a loan and complete the transaction at the end of the process.   Generally a turn key purchase of new construction can happen with any loan program including no-down payment and low down payment options.

End Loan: this is the one and only loan you get when you do a turn-key built house.

Construction Loan: construction loans vary from lender to lender but basically a larger down payment is required.   Construction loans are interim or temporary loans used during the construction process.  Generally if you are getting a construction loan it is used to purchase the land and pay the builder as the builder builds the house.

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