Construction loan Loans Work When The Bank Say No it is a short term loan used to finance the construction of a person’s home or other real estate projects or properties. A construction loan covers a portion of the costs of your project
They can be taken out to finance rehabilitation and restoration projects as well as normal building projects.
After their home or building is built the borrower has two options to continue. They can either refinance their construction loan and turn it into a permanent mortgage or get a new loan to pay off their construction loan. The new loan is usually known as an end loan.
While the borrower is usually required to make the interest payments for their construction loan whist the project is going on some lenders tend to be stricter and require the entire loan to be paid off by the completion of the project’s construction.
Before obtaining a construction loan it is crucial to consider all the aspects. Lenders tend to ask for a down payment of twenty to twenty-five per cent or more. If you have a history of limited credit and cash flow then the lender might purposely request a higher down payment.
There is also a risk of a shortage of collateral due to the house not being built yet which poses a challenge in terms of seeking approval from a lender.
The first step to gaining approval is to provide the lender with a comprehensive and detailed list of the construction details. Proving that a qualified and reliable builder and contractor are involved also happens to be another factor.
The lender will be focused on ensuring their money isn’t spent in vain, which is why it is very important to have the lender approve of your choice in contractors and the construction budget in general.
When seeking a construction loan client should consider the following items:
- How much of their own funds do they need to put into the project at what times?
- What is the construction timeline?
- Are they working with a certified builder with New Home Warranty?
- Is the budget allocated sufficient to their needs?
- How flexible is their lender of choice when it comes to draws or overruns?
- Does their lender offer advice on the best course of action when building?
Construction mortgages are not just about getting enough funds to build your dream. It is about getting to your dream with the right tools and the right timing.
At Freedom Capital Construction Loans Work When The Bank Say No, we have the reputation to look at the whole financial situation and provide expert advice when it comes to construction. We are a private alternative mortgage brokerage firm where you can expect to acquire a mortgage with simple terms and relatively less paperwork.
Even if the bank doesn’t help you get a construction loan, at Freedom Capital we can help you renovate, build, buy and invest with your property. At Freedom Capital, we do deals that the bank won’t. Let us be your financial lifeline, because when the banks say no, we provide you with the financing solutions you need.