Whats a construction Loan?

I am looking at an Investment on a 3/2 Pre-construction in Ocala Fl for $229K for 1900 Sq on about 1 acre.

What is your feedback on this type of loan please?

This is what the Realtor is stating?

This loan is a “Construction to Permanent” Loan. This particular variation of CP loan is capable of including: lot cost, closing costs, financing costs, and home purchase all in one loan. You do not have a single payment until the house is completed.

Thanks for all Feedback

sounds like a 1X close.

Typical method for preconstruction loans. You close upfront and builder is paid in draws like a rehab loan does. Many builders will make payments during the loan. What they will do is roll in an interest reserve price into the loan. Your still paying interest, but its precalcuated into the price of the loan. Depending on what home appraises for and type of loan will determine if you can go 100%. Some products do 85%-95%LTV based on appraisal not purchase price so they can roll cost into loan.

Now a downside, if the interest reserve runs out, you will have to start making payments if home is not complete. Also if loan is scheduled to go perm and house not done, you need to renegiotate the loan for an extension in construction phase. Rates are generally prime +2 then it converts.

Also the 229K price does not include land i bet. Ocala can be risk as in all of Florida right now. What part of Ocala is it…who is builder?