construction loans: Construction Loans: The Benefits of Short to Permanent Financing
- 12/05/18 02:52 PM
Construction loans are a confusing issue, a Frankenstein of sorts among real estate financing, as they usually comes in the form of two loans in one, the first covers the cost of construction while the other loan is a long-term, conventional type mortgage. You risk less when you have refinancing built as part of your loan package. Let us call the ideal form of construction financing "short to perm." You have the option to get a loan that purely covers the cost of construction, but a short to perm loan with refinancing is better. Many articles on the internet cite vague, if … (0 comments)
construction loans: Construction Loans: The Dangers of Going off Budget
- 12/05/18 02:19 PM
Construction loans present a risk to both borrowers and lenders. As a borrower, you don't have any assurance that your project will go according to plan and your lender has nothing to fall back on besides a hole in the ground and the sky above it if you default. For these reasons construction financing is distributed piecemeal in the form of draws as construction proceeds. The draw process has all sorts of exciting risk factors to building projects, the main one being you have to have a plan, and you have to stick to it. Because construction financing is given out in … (0 comments)
An exit strategy is, in essence, your plan for paying off your hard money loan. It is a plan that you will want to develop before you sit down with a lender.Exit strategies are crucial for obtaining a hard money loan. Many of these lenders offer interest-only payments as you develop or renovate your project. They obtain the big payoff upon completion when you have succeeded in your “exit strategy” and can repay them in full. For those of you in the fix & flip model, your exit strategy is fairly easy to define. You rehab and then sell the property. Selling … (1 comments)
Construction loans are a confusing issue, a Frankenstein of sorts among real estate financing, as they usually comes in the form of two loans in one, the first covers the cost of construction while the other loan is a long-term, conventional type mortgage. You risk less when you have refinancing built as part of your loan package. Let us call the ideal form of construction financing "short to perm."
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