Construction Financing: Making Large Projects Manageable

A large construction project can pay off quite handsomely in the long run, but when you are in the middle of it, it can get quite stressful. Naturally, money is one of the most stressful things out there, and it can be tough to acquire the funds necessary to complete your project. Getting construction financing is a little bit different than getting a loan for another type of project, mainly because construction often entails surprise costs that can pop up at a moment’s notice. Fortunately, there are various methods available for you to get the financing you need to make your building a reality.

The first type of loan is referred to as a one-time-close loan. Many advantages exist for this method of financing, including the fact that you get approval for both permanent and constructing financing simultaneously. There are also several options available so that you have flexibility in terms of your loan. Closing costs are also associated with construction-based loans, and with this type, you only have to pay off one of them. For one-time-close loans, you only need to start paying back whatever portion of the loan you have received. For construction projects, your payments will be spread out. You may only need to pay a few people at first to get started, but once you really get going, you will need to pay more people. Interest only accumulates on what you have spent so far, so if you have only spent a little bit of your loan at the moment, you are only responsible for the portion you have spent.

The other method of construction financing is called a two-time-close loan. As you can likely tell from the name, this financing consists of two separates loans. You get a loan that is to be used for the actual construction, and then you get another loan that is put toward the permanent mortgage. Some perks of this loan include the fact that mortgage rates you can get are often more desirable and work better in your favor. While the project is currently in progress, you are also allotted a certain amount of flexibility in order to customize any plans in place.

Both of these loans have their benefits, but both work toward completing your project within a timely manner. The worst thing that can happen is that you reach the middle of your project and run out of funds. With excellent construction financing in place, you will have one less thing to worry about.