A construction loan is used to finance the building of commercial or residential real estate. The loan applicant may be a real estate developer or an individual building a custom house.
As construction progresses, the borrower can request "draws" of funds from the lender, which are typically disbursed based on the percentage of work completed, further securing the loan with the increasing value of the partially built structure.
Once construction is complete, the construction loan is typically converted into a standard mortgage with the completed property acting as the primary asset.
Ground-Up Construction loan program is designed to provide a streamlined financing solution to build single family, multi-family, and mixed-use projects which are entitled or shovel ready
David owns a vacant lot in Phoenix, AZ and is ready to build a new single-family rental property. To finance the construction, he secures a ground-up construction loan from Finance Group, leveraging his land equity as collateral. With 100% of construction costs covered at 75% of the total completed value (LTV), David benefits from a 12-month interest-only period at 9%. Once the project is complete, he plans to refinance into a long-term rental loan, turning his land into a profitable income-producing property.
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