Because there's so much at stake, you should do plenty of homework before you commit to any construction loan. The Internet is a good place to start. However, it also makes sense to talk to a professional not associated with the lender, such as a lawyer or financial adviser.

Since construction loans aren't meant to be long term, once your building or remodeling is complete, you'll need to convert the loan. Your best option is a first mortgage, since you have longer to pay off the loan, and the interest rates tend to be lower.

Construction loans are sometimes known as "story loans," because the lender will want to know exactly why you need the loan before they're willing to consider giving you the money. That's one of the reasons it's difficult (though not impossible) to get a construction loan on the Internet.