Land & New Construction
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
How to Asses and Compare Construction Loan Terms?
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?
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!
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.