Private Money Construction Loan
To obtain financing so that a home can be built, a person can apply for a private money construction loan. Prior to applying for a private money construction loan, here are the basic things that a person should know.
There are situations in which a person has already purchased his land, but does not have enough funds to finance the construction . In such situations, a person has two options. First, he may wait until he has saved enough money. Second, he may take on a private money construction loan . The second option is more productive. When taking on a construction loan , one type of loan that can be used is the one called private money construction loan.
What is a Private Money Construction Loan?
A construction loan is an amount borrowed for a specific purpose, and this purpose is to build a home. This type of money cannot be utilized to buy a home which is already built. But a private money construction loan may be granted even when the loan applicant does not own the land on which the proposed home will be built. The loan applicant only needs to prove that he is allowed to do construction on the specified piece of land.
We are private money lending company that specialize in construction loans. Sometimes we also include funds that will cover not only the expenses for the construction materials but also for the construction process itself and may even finance the cost of the land.What is needed to apply for a private money construction loan?
As a professional lending company we require several things from the loan applicant before the private money construction loan is approved. First of all, the loan applicant must present the plans and specifications of the building . At the same time, the loan applicant must supply the name and some key information about the general contractor that will be hired. Most likely we will contact the general contractor to determine several details such as the estimate of the construction cost.
Then, the loan applicant needs to submit two more things to us. These are the title policy and the legal survey of the land. These documents are needed especially when the land has been purchased before the construction loan is sought. You may also require more documents.
What are the terms of a private money construction loan?
Private money construction loans are often short term loans. That is, the loan applicant must have a plan to pay off the loan or refinance it when the construction is already completed. To make sure that the private money construction loan does not have a long payback period, in some cases we offer additional services. These additional services may include the management of the scheduling and shipping of the materials and the organization of the finances and even consulting for the loan applicant. Of course, if the loan applicant decides use of such services, he must pay for them.
Is good credit standing necessary to get approval?
The current real estate value of the property and common sense are the two lending criteria we usually use before approving a private money construction loan.
