Construction Financing Options for Large Projects
If you own a construction company, then you need to have enough revenue to afford the equipment you require for projects. You may also need to secure funding in order to have access to land. It is a little different to get a loan for a construction company than other businesses because you are effectively asking for money to create a building that still needs to be built. However, there are plenty of ways to secure construction financing. Many banks are willing to work with these companies. Several different loans are typically available, and these loans are also available to individual homeowners who are looking to do renovations around their property.
One-Time-Close Construction Loan
Generally, this is the easiest type of construction loan to secure. The reason for this is that it is fairly simple. Basically, you only need to go through a single approval process in order to get all the money you need for your project. Additionally, there is only one closing process. This simplifies everything greatly, so you get the funds you need. You will need to ask your lender about the terms and conditions. Most of the time, this form of construction financing only requires you to pay interest on the money you have already spent. For example, you might spend a little initially to get the equipment and supplies you need. It can take weeks or months to end up spending the rest. With this loan, you only pay interest on what you have spent.
Two-Time-Close Construction Loan
This method of financing actually consists of two different loans. First, you get the loan that will provide you with money for the actual construction. Next, you are given a loan that will go toward paying the mortgage on the finished abode. The benefit to this is that the mortgage rate you get with this loan is generally lower than what you will get elsewhere. You also have more flexibility if you ever want to increase your loan amount while you are in the middle of your project. In the event you need to secure permanent financing, this loan gives you the freedom to shop around.
There is a lot your construction financing might go toward. From land costs to permit fees to escrow, constructing a new building takes a lot of money and a lot of work. In order to get the best rates on your loan, you need to find the right lender. Shop around to see what you can find.