Christian Construction Loan Lenders
Christian construction loan lenders are available on the internet and also via the classical method of actually visiting a lender, sitting down and negotiating a loan. The former is the preferred method for those savvy borrowers interested in saving time and streamlining the process. In order to take advantage of going this route, there are websites providing software to enable borrowers to fill in all personal information for the desired loan. Then, this information is made secure so that only lenders can access the borrower applications at will. Doing business in this manner will ensure competition for the borrower's business. Not only can a person apply for construction loans, but for a variety of other types of lending instruments to suit almost any purpose. Sometimes a single visit to a website can provide access to hundreds of lending sources without having to visit numerous websites, thus taking up an enormous amount of time.
There are a variety of ways to structure a mortgage when working with construction loan lenders, and most are willing to take the time to listen and work with the client to achieve the desired outcome. Typical lending structures for construction involve the application, and then creating a permanent mortgage after the building has been completed. During the building process, portions of the funds are withdrawn on a monthly basis, and these are termed as "draws". Also, the rate of interest on these instruments is quite a bit higher than regular mortgages, and the builders are charged a fee on top of that. Some lenders only provide money for certain types of projects such as the construction of mobile home parks, or for commercial buildings and apartments. Check to make sure the proper source has been obtained before venturing into the process of providing personal information.
Construction loan lenders do not necessarily have to be banks. There are private resources available that are waiting for a good project to come along to fund. These investors may be willing to take more risk than banks will, and therefore the money may be easier to obtain. The proper term to refer to this type of funding is called a hard money transaction. Also, better terms may be available by going this route, so the time will be well spent investigating this avenue of funding. These private investors may require some type of collateral such as land or an existing house to secure the loan. "Say not thou, I will recompense evil; but wait on the Lord, and he shall save thee" (Proverbs 20:22 KJV).
When negotiating with construction loan lenders, the borrower will be able to lock in the interest rate when the time comes to borrow the money. Also the builder should consider any change orders that may take place throughout the build, and the cost of these change orders should be added on to the loan. For example, a typical amount to add would be approximately 10% over the desired amount to take into account unforeseen problems. Another consideration construction loan lenders may present will be how much the new buildings will be worth once the project has been completed. Therefore, some calculations will be performed to discover the answer to this question. The result should be at or larger than 1.25. If the number is smaller than this, there will probably be too much risk involved and the deal may not go through. The lender will most likely also consider the borrower's worth which should be as much, if not more, than the amount of funding desired.
Construction loan lenders will need to find out what type of financing the client desires. For example, will the term be for one year, nine months or six months? It is rare for a construction lender to provide financing for longer than one year, but it has been done. Finally, there will be the need for the borrower to provide detailed plans to the financier so that a total picture of all costs can be obtained and considered. Some construction loan lenders will allow the borrower to base the transaction on securities the borrower owns such as Self-directed Roth IRA's and 401(k) monies. IRA's are popular with those buying into franchises and the process is relatively quick from application to final construction. Most lenders today expect borrowers to risk more of their own money due to the recent credit problems in the USA today. Banks have large amounts of houses to auction due to owners defaulting on mortgages, and this becomes a liability for them. Commercial mortgages are now more similar to traditional financing regarding requirements to be met. Therefore, more caution is being exercised when granting mortgages for commercial construction purposes.
Finally, for those borrowers who are not employed on a regular basis, and for those who have difficulty producing enough financial documentation in order to secure a loan, then there are construction loan lenders who can arrange to provide what is termed a no doc loan. These loans however will only be given to borrowers who have good credit. Since there is little documentation to support lending the money, the lender will most likely require a higher interest rate by the borrower. Be prepared, however, to prove income through producing tax documents as far back as two years. Also, the savvy borrower should be sure to perform due diligence and shop lenders extensively to be sure a good deal is obtained. Much of this can be done over the internet, and there may even be some lenders willing to do this type of loan in this manner.
Christian Bank Construction LoanThe act of obtaining a bank construction loan is not a difficult process as long as an adequate bank or financial institution is sought out. Businesses and individuals frequently have construction needs but not the necessary resources to fund them. As a business grows and expands more space could possibly be required or building built, and a burgeoning family oftentimes requires more rooms in a house. Whatever the building needs might be there are loans that can easily cover all the expenses and help to make the process to run as smoothly as possible so those in need can rest assured that they will be able to accomplish all that is striven for and then some.
There are several types of construction loans available on the market. People should be aware of the type they require so that they can be assured of achieving the best deal and plan that will work with whatever budget they might have. Despite the different options which are based on factors determined by the individual or organization which applies for the loan, there are a few facts that should be kept in mind. First of all, a bank construction loan is unlike other loans in that the bank, financial institution, or lending agency needs to know the facts behind the reasons for the cash advance, in other words, the story behind the construction. This means that before funding can be approved of the institution providing the funding needs to be informed of why and how the funds are intended to be used.Knowledge concerning the intended use for the funds is crucial as the lending service in question requires the information as part of the application process. Due to this requirement a bank construction loan is different from all other mortgages and financing plans.
The main aspect that sets such loans apart is the way that rates are not fixed but variable throughout the duration of the agreement as so many people are part of the agreement. Funds are interspersed between not only the one seeking the lease, but the head contract, and the establishment which provides the loan all have a say in how much gets used where. In fact the lender has a say in how much they are willing to offer within a certain time frame but this is only a factor if the one seeking the loan does not already have land. Terms are different for those who have already acquired a portion of land on which to build which is beneficial as the land can count as equity towards an agreement
Many people who apply for a bank construction loan have the option to choose to have one set up that can later be converted into a mortgage loan on a house. Converting from one to another is possible and can save time, effort, and money in the long run that would otherwise get taken up do the process of applying for yet another portion of borrowed funds. Converting from one form to another is referred to as construction-to-permanent and such a process helps to make the overall system run smoothly as in the end there will be only one closing for a single application. Another option that is available is a system in which the rates are locked. A rate lock agreement ensures that the rates one was promised at the beginning of the agreement will be honored until the set closing date of the plan. Those who plan to convert from a loan to a mortgage are more likely to pay a higher interest rate on a bank construction loan as by doing so can help to secure a better mortgage.
There are several options intended to cover the many types of construction projects that might perhaps require extra funding. For people who require bank construction loans for a remodeling project on their home or someone who is building a home, will work with a smaller developer. This means that a construction loan will most likely provide all the money that is needed for the completion of the project, and over a period of six months all the necessary payments to the contractor is paid through interest. After the end of the specified duration, the loan can easily be converted into a mortgage with closing costs reduced significantly.
The rules and guidelines for a Christian bank construction loan help to set the loans apart from all others. When a person applies for funding for construction they enter into an agreement with several others, whose common goal becomes the completion of a project in a set amount of time. The bank or financial institution that provides the funding takes care of any and all payments that go to the contractor as all the funds are managed thusly. Oftentimes the individual group who owns the land or property on which the funded structure is built can oversee all activities but can refrain from dealing with the hassles of paying everyone involved. By providing the appropriate payments throughout the duration of the plan, all can benefit and the end result should be satisfactory, and eventually paid for after minimal closing costs. A bank construction loan can prove beneficial for a vast array of building needs and provide the needed funding to get a project done, not unlike what the Psalmist says, "Except the LORD build the house, they labour in vain that build it" (Psalm 127:1).