Affluent home buyers are building their dream mansions using construction loans that cover extravagant projects, including indoor swimming pools and multi-car garages.
By ANNAMARIA ANDRIOTIS
Affluent home buyers are building their dream mansions by signing up for jumbo construction loans that cover extravagant projects, including indoor swimming pools and multicar garages. Some are using construction loans to build their vacation homes. And others are using them to pay for major renovations, like adding extra bedrooms or extensions, to their existing homes.
A construction loan is basically short-term financing that covers building costs while the work is in progress. Demand for these loans among the wealthy dropped after the recession as home values fell. But the tide is changing. “Overall, there’s a general uptick—the market has been coming back,” says Kim Casaday, president of the home-financing division at Zions Bank. The Utah-based institution has seen originations for jumbo construction loans increase 15% during the first eight months of this year compared with the same period a year prior.
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