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Key Construction Financing Mistakes
By admin | February 15, 2010
If you are planning a construction project that will require construction financing, there are a few mistakes you should try to avoid at all costs.
First, make sure that you a solid budget worked out that lists all the costs in detail and are each supported by a written estimate to make sure you are being realistic with your numbers. Then, project the costs over time so that you can see when costs are going to be incurred and when they are going to have to be paid. After these two steps are complete, develop a contingency fund for at least 10% of the project costs to allow for any unplanned events or over looked costs that may come into place.
In many, many cases, this first step is not completed properly and can result in total project failure in some cases where a great deal of value can get destroyed in the process.
Second, make sure you select a lender and mortgage program that is going to suit your needs and situations. Institutional lenders can sometimes have very strict policies and procedures that you can’t live up to. private lenders are individuals who are not always as professional and predictable as a main stream lender. And the mortgage terms you select may not match up with the requirements of the project. Therefore, its extremely important to not just sign up for a construction before knowing who you’re going to be dealing with or what they’re going to be provided.
Third, don’t try to locate proper financing on your own. Find a construction mortgage broker that focuses on construction and utilize their well established knowledge and lender pool to your advantage.
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