Many intermediaries can meet customers who need construction loan financing, some of whom need it more than others. Commercial construction loan financing is generally required by developers and investors. The land they buy is either the land they want to develop or the land they want to develop completely in the form of a single or multiple land to be built. Land on which there are existing dwellings or structures is often referred to as “land”. Filling structure;. If the builder is only improving the existing structure, we call this type of building renovation. All of these examples typically require construction funding for residential or commercial real estate.
There are several different types of construction loans. When builders or developers obtain land for development, they usually seek land loans in combination with land development facilities. Land loans are used to end land purchases and development loans are used to support land planning and development to improve more use of land in residential or commercial areas, such as agricultural areas. After acquisition and initial development, developers or builders will need financing to service land including sewers, water, hydropower, and land service loans. The next financing is generally for builders and developers, unless they are the same house. Builders will need construction loans to build residential or commercial buildings.
If you represent customers who need development or construction loan financing, here are some quick tips. You may need to remember.
According to the Construction Lien Law, the borrower providing construction loan financing often deducts 10% of the one-time advance payment other than the land advance payment. For budgetary purposes, borrowers should be aware of this from the beginning, so that there will be no confusion in the future.
It is important that customers have a good budget, including a detailed breakdown of hard costs and soft costs, and soft costs include interest reserves.
The material surveyor shall be used to approve the budget on behalf of the lender and provide the lender with the construction progress report to prove that all advances are in line with the budget. For smaller residential construction loans, some lenders will use appraisers to report progress.
In almost all cases, the borrower granted construction loans in the form of “loans”. Completion cost “; the reason is that according to the aforementioned Construction Lien Law, the fund plan is advanced in the progress withdrawal and detained by 10%. This means that there is always enough funds to complete the project in the remaining budget.
If the customer plans to obtain the second mortgage loan financing, the second mortgage lender must postpone all advances of the first mortgage loan or the construction loan project with ownership priority, so the existence of the first mortgage loan may become a challenge for construction purposes.
Providing commercial construction loans is very beneficial to mortgage brokers or agents. Creating such financing opportunities is a good opportunity to let you know how to diversify the products available to customers. It is an excellent way to gain experience and provide such financing for your customers by cooperating with construction loan financing borrowers who want to co agency transactions or guide you to train and complete projects through intermediaries with rich experience in construction financing.
