Monday, November 27, 2006

Cash Shortage during Construction! Avail Construction Loan

A construction loan is the loan that is given to people to meet their cash crisis during the construction of a house. Many a time, people face shortage of cash while the construction is in full swing. In such cases, they need cash within a short notice. A construction loan is the perfect option to handle this situation. These loans are also known as story loans, as lenders offer the loans after being aware of the story behind the construction.

How much can you get ?

As a construction loan, a borrower can borrow the amount, ranging from £50,000- £2,000,000. These loans are mainly short term loans. The amount is repayable as early as borrowers complete the construction and the house is prepared to be dwelt in.

Based on the few factors, the interest rate of a construction loans is decided. These factors are as follows:

•The stage of construction works

•The agreement among all the parties, involved in this construction, like, borrowers, lenders and contractors.

What about Repayment ?

But, in this context, one thing is necessary to mention. Since, these loans are offered for a short period of time, hence, the interest rate of this loan is a bit higher. Usually, the interest rate is available with adjustable and variable rates options. At the same time, the repayment option of a construction loan needs to be mentioned. Borrowers can pay off the amount with small interest only repayment. Due to this reason, borrowers can enjoy the benefit of lower installment option.

While opting for a construction loan, many borrowers can opt for construction to permanent loan program. In this program, the construction loan is transformed into mortgage loan after issuing the certificate of possession. But by availing this option, borrowers need not pay for two loans. If your construction loan is transformed in mortgage loan, there will be one application and one closing.

Find the best loan for you !

Like secured loan, in case of construction loan, there is a possibility of collateral repossession. Since, borrowers need to use their residence as collateral, hence if the amount is not repaid, their collateral will be at risk. So, a sound decision is required before applying for this loan. In such cases, experts’ advice can be advantageous, which will guide you to choose the right option.

Conclusion

For assisting people financially in their construction work, the construction loan is customized. This loan is available for a short period of time. But in future, borrowers can convert this loan into mortgage. In case of coping up with sudden cash needs during construction work, the importance of this loan is unavoidable.

2 comments:

MortgageTop said...

Hello,

I recently published an article on mortgage loans, tips on how to make them work for you and other forms of mortgage financials – here is an excerpt from it, in case you are interested:

Smell a Good Deal for a Real Estate – Try to discover a property that has already got some equity in it, when you purchase it. Equity represents the value of a real estate, a property after you have paid any mortgage or other charges relating to it.

Try to Get a Second Mortgage on the Real Estate – You could try to be more creative and ask the seller whether he would be willing to have a second mortgage on that home. Thus you could set up an agreement with the seller through which you will have to pay monthly an approximate sum of $200, for instance, on $15,000 of the price of the real estate (plus or including the interest rate), for the second mortgage.

Save Some Money to Pay in Advance – Some lenders might give you a full credit if you come with at least a small percentage of the sum. This would grant you supplementary points for getting the credit and would also lower the interest rate – e key point of any mortgage refinance program.

Don’t Give up, Go Further – don’t trust the first broker who tells you that there is no hope for you. You will finally find someone who could offer a viable solution, just keep asking and searching. An alternative is to apply online to mortgage services. Thus your application would be seen by more lenders and you might get more offers to analyze your solvency.

Improve Your Present Credit Score – by not applying to credit cards, auto loans or other loans, if possible. Too many inquiries would also affect credit scores. Another important thing you should do to improve your credit scores is to acquit your current duties and payments on time.

If you feel this helps, please drop by my website for additional information, such as how to refinance a second mortgage or additional resources on mortgage rates.

Regards,

Michael

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