What type of mortgages do lenders provide to finance the construction of property improvements?

B. Construction mortgages are specifically designed to provide financing for the construction of new homes or property improvements. These loans are tailored to meet the needs of builders and homeowners who are constructing or making significant renovations. Construction mortgages typically involve a short-term loan that provides funds during the building phase, which is then converted into a long-term mortgage once the construction is completed. This type of financing allows borrowers to pay for the materials and labor necessary for construction, making it the appropriate option for such projects.

Refinancing mortgages, on the other hand, are intended for existing properties, allowing homeowners to replace their current mortgage with a new one under different terms, often to secure better rates or adjust payment schedules. Home equity loans are based on the equity of an existing home and are used for various purposes, including renovations, but they are not specialized for financing construction projects directly. Fixed-rate mortgages provide a consistent interest rate and payment over the life of the loan but do not cater specifically to construction needs.