Construction
Loans differ from regular purchase money or refinance home mortgages
in the way the loan amount is calculated and the way it is
structured.
The main components of a construction loans are:
1-
Soft
costs; consisting of architectural plans, engineering and permit
fees.
2-
Hard
costs; which are all the actual physical costs of construction.
3-
Closing
costs; consisting of origination and lender fees, title, and closing
fees.
4-
Inspection feed.
5-
Reserves; consisting of interest reserve and contingency reserve.
6-
Existing
lot pay off
Regular
purchase money or refinance mortgages are based on Loan to Value
Ratio (LTV). Where as, construction loans are based on LTV as well
as Loan to Cost Ratio.
What
makes the whole thing more complex is the fact that the way these
numbers are calculated or the way the numbers are put together
differ from one investor to the next.
In
fact the calculations get complex enough that most loan officers in
most lending institutions don’t even know how to calculate a loan
amount. This is what results in last minute unpleasant surprises.
The
problem most applicants of construction loans face is when at the 11th
hour they get a call informing them of the final loan amount as
calculated by an underwriter which may or may not be sufficient to
meet the borrower’s needs.
At
http://www.ConstructionLoanCenter.com we specialize in
construction loans. Our familiarity with the guidelines of
construction loans offered by most major institutions makes it
possible for us to choose the construction loan program that best
suits you and your project.
Since
we are approved brokers with all these investors, the cost of the
loan to you is either the same or sometimes even better than
applying directly.
Construction
loans are a specialized field:
And as such we assign you an expert
consultant from the moment you apply. He /She will work with you
from the very beginning until the funding day, making the process
smooth and seamless.
For
Detailed Frequently Asked Question on the Draw Process please go to
the:
Construction Loans Draw Process Pages.
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