What is a construction loan?
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A construction loan is a short-term loan issued by a bank for the specific purpose of financing a new home or another real estate project. A traditional mortgage generally referred to as a permanent loan, can help you acquire an existing home. A construction loan, on the other hand, would help you build a new house from the ground up, particularly if you still need to buy a raw home. We specialize in Construction loans at Commercial Real Estate Loan Pros of Fort Lauderdale.
How do construction loans work?
The loan may be extended to anyone who invests their time and resources on a house or similar expenses. Individual homeowners, builders, or small business owners can use construction loans to finance their construction projects. When you buy the home, the equity you have in the property would be used as a down payment on the construction loan. Many borrowers ask if a construction loan develops into a mortgage.
The borrower will refinance the construction loan to a permanent mortgage until the house has been completed and the term of the loan has elapsed (usually just one year). Alternatively, the borrower might be liable for a new loan to pay off the renovation loan (often referred to as a “mid loan”).
Does the creditor allow regular payments to the building loan?
Yes, but interest payments on this loan may only be required once the development project is already underway. Unlike a lump-sum loan, construction loans are similar to a line of credit, but debt is focused only on the same amount you borrow to finance each portion of the project, rather than on a one-off basis. Any building loans require the balance to be paid off in full by the time the job is finished.
Real Estate
Typical terms and conditions for real estate loans include:
- Net operating profits enough to finance the servicing of loans
- Good credit score or FICO Small Business Score Service (SBSS) credit score
- Restricted liability or company form
- Good personal credit ratings and a reliable financial background
- Details on the type and valuation of land, including an appraisal
- Public documentation such as tax returns, reports, corporate history, forecasts of cash balance, and market plan
Construction
Commercial construction loans also require a substantial quantity of paperwork. In addition to personal and organizational financial reports, you may need to provide:
- Contractor estimates
- Project plans
- Output predictions for the building, defined as “proforma”
Banks would want to guarantee that the project proceeds as planned, and will enable you to have input as construction begins. The building is a high-risk investment, and traditional lenders are far warier in offering to fund projects that may not pay off according to predictions.
Need Assistance Securing Commercial Construction Financing?
Qualifying for a commercial mortgage or a building loan is not convenient, and sometimes the background credit check will stand in the way of securing funding from traditional outlets. If you’ve just discovered the right property to purchase or are itching to get started on a construction project but don’t have a bank success record, Commercial Real Estate Loan Pros of Fort Lauderdale may be able to support it.
Don’t miss the perfect development moment. Discuss your needs with a Finance Expert at Commercial Real Estate Loan Pros of Fort Lauderdale, and see if a flexible commercial loan is ideally suited to your company.
There are so many areas or regions where we offer these services with most of them being cities.
However, if you need any of these services, you need to contact us. The list below comprises the areas where we offer these services.
We service all counties and cities throughout South Florida. However, if you need any of these services in other cities throughout the state of Florida, please contact us. See what services we offer below: