Getting a Construction Loan

February 26th, 2014 by The JetSetter Team | 1 Comment »

JS0205If you are looking to improve your existing property, looking for a one-of-a-kind DIY property, or planning some crazy new project, you might be in the market for a great construction loan. There are a lot of options available to you, and Jason Hartman wants you to be educated before you enter into any of them.

First, you will want to do some shopping around. This means that you should be meeting with multiple officers at banks that offer construction loans to see what is available to you. Do not be afraid to ask questions so that you are well equipped to make a decision. Use the internet to your advantage—investigate different lending institutions and agents to find one that will best suit your needs. Go local, if you are able, as these individuals usually have both local and national connections that can give you the best deal at no extra cost.

Next, enter into a contract agreement and get it in writing. This way, you’ll have written record of the duties, responsibilities, and fees between you and the builder. You should also include provisions for potential changes, etc. To get a construction loan, you’ll need a well thought-out plan.

Then, sign up for Course of Construction Insurance, sometimes referred to as a “builder’s risk” policy, which will protect against fire, lightning, or vandalism on the property under construction. You’ll also need General Liability Insurance, which is sometimes provided by the builder. If you are going to have a large number of employees, consider Worker’s Compensation as well for potential injuries that may arise.

Finally, it will be time to submit the application for your construction loan. A loan officer will give you the application, and you should be prepared to fill it out, complete with your basic financial history. You will also need a credit report. With these documents, the financial institution will be able to determine your loan eligibility.

Pending your loan approval, you’ll be able to get started on your construction project in no time at all! As with most financial decisions, this process will be simplest if you’ve done a bit of prep work—fully educate yourself, get your documents in order, and prepare to spend days (and maybe nights) working away!

Have you ever applied for a construction loan? Share your tips, tricks, and experience with us below!
(photo credit: Βethan via photopin cc)

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