Qualifying For Construction Loans: A Beginner’s Guide

 

 

Breaking ground on a construction project can be an exciting moment to look forward to. Before you do this, however, you will need to take time to think about how you plan to finance the job. There are many expenses associated with a construction project. You will need to think about the costs associated with building, everything from the land itself to the materials being used to the workers performing the job must be taken to heart. Examining the specifics of construction loans can be a great way for you to get an idea of what you will expect when you speak to borrowers. Here are some basic bits of information that you might need before you take out your loan.

One of the more popular types of financing out there is a one-time-close loan. There are fewer costs associated with this loan, which is why it sees so much use throughout the country. Construction loans structured in this way are usually perfect for those who have an idea of the exact costs of their project. When you know, to the dollar, how much money will be required to complete your project, then this is the option that you are going to want to go with. On the other hand, when you worry that you may discover you need more money down the line, it can be useful to examine other forms of financing with your construction loans.

The other major type of loan is the two-time-close loan. With this loan, you will have the option of borrowing more money should the need arise. If, for example, you are coming close to the end of your project, and you realize that you are a few thousand dollars shy in the budget, you will have the option of taking out more money from your lender. What is important to remember, however, is that you will have to pay two sets of closing costs with this loan. It can be helpful to sit down before you apply for loans to see what you might need to borrow and if the associated costs are worth it for you.

Getting ready to tackle a construction project can be quite exciting. When you know all of your expenses in advance, it can make it a whole lot easier for you to find a form of financing that works best for your needs. Do your research and in no time you will figure out a solution that has the best results for your construction project.

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