Most construction loans have guidelines that require a full construction permit before they will close the loan.
This presents a challenge when it comes to combining the purchase of a property with a construction loan, forcing borrowers to either negotiate a long escrow period which in this market is a practical impossibility, or to close the transaction with a purchase money loan and then refinance into a construction loan.
None of the above options are particularly desirable. In the former you the borrower ends up negotiating for ever and in the latter closing costs add up.
We now offer a construction loan that not only offers a high 95% loan to cost, but will close the transaction before the final permits are issued. However the fact remains that a construction loans clock starts running from the day the loan is funded. Therefore you must choose your construction period carefully so as not to exceed the time period.
Going over the time period in a construction loan can result in payments of penalties that could add up to a substantial amount.
This presents a challenge when it comes to combining the purchase of a property with a construction loan, forcing borrowers to either negotiate a long escrow period which in this market is a practical impossibility, or to close the transaction with a purchase money loan and then refinance into a construction loan.
None of the above options are particularly desirable. In the former you the borrower ends up negotiating for ever and in the latter closing costs add up.
We now offer a construction loan that not only offers a high 95% loan to cost, but will close the transaction before the final permits are issued. However the fact remains that a construction loans clock starts running from the day the loan is funded. Therefore you must choose your construction period carefully so as not to exceed the time period.
Going over the time period in a construction loan can result in payments of penalties that could add up to a substantial amount.
