What Does a Construction Loan Do For You?
Hello, and welcome to our very first blog post! Here at Owner Builder Loans, LLC, we want to make sure that everyone understands exactly what construction loans are, what they are useful for, and why you might need one. For those that are unaware, construction costs can get a little bit out of hand. While most people try to budget as well as they possibly can, unforseen circumstances, accidents, and faulty materials can all come together to greatly increase the amount of money that is required to complete a project Construction loans are a short-term financing option that can help individuals pay for construction costs when they attempt to build a new structure or add new materials to an existing structure. Continue reading below to learn more about why these loans are so helpful.
Short-term is Key
The first benefit, and one of the best in our opinion, to construction loans is that they are a short-term financing option. These loans are intended to provide people with the capital that they need quickly while also providing an easy way for a person to quickly pay off the loan once they are done with their construction project. For business owners, this is especially beneficial because it gives these entities the breathing room that they need in order to quickly and adequately fund a project. As all business owners are well aware, businesses are not cheap to run and, in come cases, coming up with enough capital to complete a big project is not always the easiest thing to do when a large majority of the business’ capital is tied up in assets and other non-liquidatable forms. A construction loan allows businesses to get the money they need when they need it without having to worry about a large amount of interest accruing in the short term.
Construction Loans are Flexible
The second reason that construction loans are so beneficial is because many lenders are now offering loan options called a “construction to permanent loan. This construction loan type is able to provide people with the money they need in order to complete a construction project, however, it also allows them the time they need in order to properly pay it back. After the construction project is finished, this type of construction loan transitions into a loan that is more akin to a mortgage than anything else. This is especially beneficial for entities that won’t have the necessary capital in order to pay back the loan at the end of the construction process. In addition to this benefit, it locks in the interest rate of the loan, meaning that the loan will not be able to accrue large amounts of interest while the person who took the loan out is trying to pay it back.
Construction Loans Clarify Plans
Perhaps THE best thing about construction loans is the fact that in order for a person or a business to acquire one of these loans, they must have a highly detailed plan that lists exactly what the money will be used for and what the overall construction project is going to cost. In many cases, the lender will scrutinize the plan which, in turn, means that the person requesting the loan is more motivated to get the job done on time and within the set budget. This is especially true if the person who took out the loan is the one completing the project.
If you are planning on constructing a new building or you are planning to add an addition to an existing structure, please contact us today at Owner Builder Loans, LLC. We will work with you to provide a loan that will help you cover your construction costs and offer a wide range of flexible payback options. Whether you need a loan for a small home improvement project or you are planning a large scale construction project, we have the loan that is perfect you contact. Don’t waste time and energy trying to come up with the capital you need on your own, contact us today and show us how easy it is to get the money that you need for your next project.