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• About Us  • View Testimonials  • Construction Programs  • Construction rates  • Comparing Options  - Loan offers from different    banks  -Construction cost estimates  -Building new or remodeling    VS buying an existing home  -Being my own contractor   VS using a general contractor  - Get Answers  • Educational Resources  - ABC's of Construction    Financing  - Stick-Frame Home    Information  - Log/Timber-Frame Home    Information  - Modular Home    Information  - Lending Dictionary  - Construction Dictionary  • Bank  - Refer a customer for a    construction loan  - Learn more about    construction loans  - Receive consultation on setting    up our own construction    loan program(s)  - Get added to the Construction     Advisors network of lenders  - Get Answers  • Contact US   Is Construction Financing Different From Other Mortgages? Here is a revelation. Lenders are in the business of lending money to make money. All lenders do this by lending money with lowest risk possible. With purchase and refinance mortgages the risk is reasonable with people to lend money to and a house to sell if these people do not make their mortgage payments on time. With a construction loan the risk is much greater because there is no collateral to sell until the house is finished. There are people who are foreclosed on when there is not a house finished everyday. This means that the bank must cover everything during construction just to get a finished house before they can sell it. That means that the lender does not make the money that they want to. Now you have the main reason why construction financing is harder to come by but let us go into a little more detail anyways. Construction financing has some major differences from refinance or purchase money mortgages. First of all, good construction financing can be much harder to obtain than "traditional" mortgages. Less than 10% of the country's lenders offer construction financing options. Of that 10% maybe 1out of 100 know anything about the actual construction process. In most cases, borrowers are very limited to the number of repayment terms available. Fortunately, Construction Advisors is more than capable of "picking up the slack" that all of the other lenders just don't care about. Why? Since lenders are evaluating risk when they lend money then it only makes sense that most of them are scared to get involved. For the ones who are willing to get involved very few of them have enough experience to understand how to make good loan opportunities for borrowers. It is their inexperience that leads them to offering very poor repayment terms. It is Construction Advisors knowledge of the construction market that allows us to make construction financing better. A construction loan requires the lender to get affiliated with the proposed project before any work is completed. This means that the lender must review house plans, land data, builder contracts, budgets, etc. This means that there is more work involved for the lender and borrower. The idea is to make sure that a realistic budget is in place with capable people working on the construction of the home. With a purchase or refinance loan all of this work is already done and the lender knows the fair market value of the home that they are investing in. If the value is there then there is a lot less risk. With a construction loan the fair market value can be figured out but there is no home to sell until the house is complete. Once the lender commits to making the loan they now have to service the construction phase. They will have to set inspections, review inspections and release draw payments in a responsible and timely manner just for starters. As monies are taken out on the construction credit line the lender must determine the amount of interest that the borrower is responsible for at the close of every month and send out payment statements to collect on time payments. The loan must then be modified to a permanent mortgage for construction-to-permanent or that the take out loan closes for construction only loans to eliminate the risk that was involved during the construction phase. This is an immense amount of responsibility that the lender has and it is important that you have a lender that not only offers good rates and service but one that can save you a real headache that can be caused if you pass your deadline dates. Experience the Construction Advisors difference today —Contact Us to get started!

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