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User Stats

1
Posts
0
Votes
Fernando Mingo
0
Votes |
1
Posts

How to Asses and Compare Construction Loan Terms?

Fernando Mingo
Posted

Good afternoon everyone,

I currently have new construction coming up where I am sourcing construction loan quotes from multiple lenders. I'm receiving multiple offers ranging from 11.75% to 12.25% with points varying from 2% to 3%. I have one at 15.375 with no origination fee. How can I properly asses each loan term and compare it to the others to ensure I'm receiving the best deal?

User Stats

71
Posts
20
Votes
JooYung Choi
  • Realtor
  • New Jersey
20
Votes |
71
Posts
JooYung Choi
  • Realtor
  • New Jersey
Replied

Hey Fernando!

Some questions to consider to help determine the best lender for your situation:

What's the loan term length & down payment needed? - 9 months at 12% is different from 12 months at 12%!

 How many months do you expect you'd need to complete the project? -if you can do it quickly, maybe the one with higher interest / no origination fee? Gotta do the math!

Can you extend the loan term if needed?

What's the draw process / fees and how quickly will you have access to the funds? 

Dutch or Non-Dutch Interest? 

Definitely read all their reviews, see how they communicate and look into the company's reputation. 

Hope this helps!

User Stats

678
Posts
332
Votes
Ed O.
Pro Member
  • Investor
  • Statewide, MO
332
Votes |
678
Posts
Ed O.
Pro Member
  • Investor
  • Statewide, MO
Replied

Wow, those terms look prohibitive. 

Have you checked with a bank? I do realize bank financing isn't available to everyone for a lot of different reasons, but it would seem really hard to make a deal work with those terms. 

  • Ed O.
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