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A Construction Loan To Build A Project
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Posted On :
Dec-16-2010
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Article Word Count :
509
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Getting construction loans, commercial loans or hard money loans is not easier in this weak economy. Owning a home is one of the greatest achievements in one’s life. It means a lot also. To build a beautiful home it needs more investment and it is a big achievement in life.
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Getting construction loans, commercial loans or hard money loans is not easier in this weak economy. Owning a home is one of the greatest achievements in one’s life. It means a lot also. To build a beautiful home it needs more investment and it is a big achievement in life. To achieve our aim we need to get a construction loan. A construction loan is a short-term interim loan, for financing the cost of construction. The Lender advances funds to the builder in periodic intervals as the work progresses. They are Loans made for the construction of homes or commercial buildings.
Usually funds are disbursed to the contractor-builder during construction and after periodic inspections. Disbursements are based on an agreement between borrower and lender. The construction loans differ from the traditional home loans, basic types, miscellaneous charges, documents and components. Commercial loans are bank loans that are granted to different types of business entities. In some cases, the commercial loan is extended to assist a company with short term funding for basic operational functions, such as meeting payroll or purchasing supplies that are used in the production of the goods manufactured and sold by the company.
If we are in a sudden need of money and if we think we can’t move with the procedures with the construction loan then we can prefer a hard money loan. To get a hard money loan the lender may be represented by a broker who will arrange the loan. If a broker is involved the broker takes a commission called points: the fee for finding a lender and preparing all the paper work. In some cases there may be prepayment penalties. Interest rates can run from 11% to16% or more. These loans have a quick turnaround time and generally have a one to three year term, but can be longer.
To get any kind of loan we have to move on with the procedures to get it. Certain private offices are there to help people by providing construction loan. The rules and regulations of the government are too high and getting a loan is quiet complicated, by completing all formalities and submitting all documents. The government looks into the previous financial growth of a customer and then only approves the loan. But the private concerns look into the capacity of the borrower and approve the loan and help them in achieving the great dream of their life.
If you are considering applying for the loan, be aware of any costs that will go with it. Getting a lower interest rate may seem the wise choice but ask the following questions first:
• What are the origination costs of the loan?
• Are there points you will have to pay?
• If you are refinancing, does your current loan have a prepayment penalty?
Sometimes when a lender is forced to close additional mortgages to meet a commitment, they offer lower rates even though interest rates may have increased.
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Article Source :
http://www.articleseen.com/Article_A Construction Loan To Build A Project_45164.aspx
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Author Resource :
Getting A Construction Loan Is Easier Than You Think. For more information about commercial construction loan and hard money loan visit the site.
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Keywords :
construction loan, commercial construction loan, hard money loan,
Category :
Finance
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Finance
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