Construction loans are a great way to have the home you want, where you want. Construction loans can make owning the perfect home that doesn’t exist possible. In addition to building your ideal home, you can build your dream vacation home to your liking. Rentals and spec homes or other one-to-four-unit investment properties can be more profitable if constructed from the ground up.
In addition to all the different requirements lenders have for a non-construction loan, construction lenders have additional requirements for the project. Simply put, construction loans are more complex than non-construction loans. Lenders generally view Construction loans as riskier and more costly because they must manage the project funding until completion.
Traditional residential construction lenders’ terms may be limited to the project phase, requiring you to make a balloon payment with no secure plan to pay off the lender. Refinancing the construction loan can also be problematic if rates increase substantially during construction. Finding the best rates between construction lenders can be challenging without fully understanding all the costs and restrictions associated with the project cost disbursements.
In other words, it’s much harder to compare apples-to-apples with construction loans without a construction lending expert. Low down payments can be hard to find, with many traditional banks limiting the amount of money you have available to furnish and decorate a new starter or move-up home. Project review is another critical component of a construction loan. Many traditional banks will not accept the actual builder’s price per square footage, material, or labor costs.
Many lenders will also not allow an owner builder, which can reduce profitability for spec builders or professional builders building their primary residence. Getting your contractors approved with many lenders can be problematic if they’re small companies or have limited business time. Draw amounts and frequency are other essential factors. Some construction lenders will only fund a portion of your draw request, or they will reimburse you for money spent, meaning you need to have extra cash available for project funding in some cases. Deadlines are often the most critical factor in making the sale or move-in date for any home. It’s not uncommon for construction loans with the best rates and terms to take longer to fund and complete a project. This is why you need an expert broker to find a construction loan with the best overall terms and the least number of project and time restrictions. We have access to residential construction loan programs that feature the following solutions:
One-time close options
One-time close options that convert your construction loan to a loan term like a 30 or 15-year fixed without refinancing.
Low rates
Comparable options between low rates and overall cost for the best savings. We’ll find the best rate to overall cost scenario.
Project budget restrictions
We can provide construction loans that allow the builder to build at competitive industry cost instead of inflated costs traditionally used to further secure the lender.
No draw inspections
No draw inspections loan options with approved general contractors. We provide access to loan options that allow the general contractor to manage the project funds.
Owner builder options
If you have adequate knowledge and experience, we can approve you as an owner builder so you can manage your own project and avoid paying a general contractor.
Lot loans and soft
Lot loans and soft costs as part of your construction loan so you can build with less cash into the project.
