Monthly Archives: December 2018

Construction Financing: Five Tips for Getting a Construction Loan.

Category : Construction Loans

Here are five tips that will be helpful to broaden your knowledge of construction project
finance:
1. You need to know if the requested loan is within your budget and what the monthly
payment is going to be before you run out and buy land. Things to consider are the
following: what is your FICO score ( high or low), do you own land free and clear , do
you have experience, what exactly do you want to accomplish and how, how much
money do you have for a down payment. Construction loans are often ‘story loans’ so
make sure that your “story” is a well-told narrative of the situation;
2. It is good to be aware of your options for financing. You can get a short term 12 to 18-
month construction loan that you will have to refinance into a new conventional
mortgage loan once construction is completed. This approach has its pros and cons. On
the one hand, you will face two sets of closing costs going through the loan process
twice. But on the other hand, once the project is completed, you will have more
flexibility when shopping around for conventional mortgages. A popular construction
loan is the ‘one time close’ or construction to permanent loan. You will have one set of
fees and one closing;
3. Interest reserve is an estimated interest payment over construction period, which is
added to your loan amount. This is a tool created to benefit the client, so it will not be
necessary to make a monthly payment during construction period. However, because
the reserve is added on top of the loan amount, you will pay interest on the total
amount. You will need to make this decision:  whether you want the interest reserve to
be added or you just want to pay monthly interest payments out of your other business
proceeds.
4. Contingency funds are added to the loan amount just because construction projects
tend to have cost overruns. Banks normally add 5-10% of cost breakdown to the loan
amount. Again, it is your choice to agree on that or not;
5. It is crucial to know about possible options for interest rates.   Interest rate can be
locked until completion of construction or can be floating. Many lenders have higher
interest rates if you lock upfront.  Some lenders would not allow you to lock the interest
rate until the construction period is over. The other thing to consider is if the rate stays
the same after construction is finished and the loan is converted into a mortgage. You
need to make sure that choosing the floating interest rate will not cause you a problem
with monthly payments once rates will go up.

Finally, how do you find the right lender for your construction loan? One way to look for
construction financing is to go to every bank in town. Most of the time, you will not get
anywhere. If you do find a bank that will do a construction loan, they usually can offer
one product that may or may not be right for you. Magna Capital Group provides
different options to clients with construction loans for residential and commercial
construction projects.


Top 4 Things To Consider Before Starting A New Home Construction Project!

Building own new home is one of the most exciting and rewarding projects for everyone, but it requires lots of time and money. Constructing a new home comes with the responsibility of making many important decisions including where you finance your loan, hiring a contractor, and more. Building a new home has many exciting advantages than buying an existing home, such as the ability to choose flooring, the exact kitchen cabinets, counter tops and even floor plan you want. The builder will work with you to customize the home before it’s completed.

If you’ve been thinking about building a new home, here are few healthful tips that you should consider before starting your construction project:

1. Careful Inspection Of The Property:
It’s important to do a careful inspection of the property before building your new home. Make sure the property has access to all necessary utilities and appropriate water and sewage services. Choose a lot/land that is well suited to the type of home you will build.

2. Choose The Right Home Builder:
Hiring the right contractor impacts the success of your project and your overall enjoyment of the building experience. Hiring a builder is like hiring any other type of professional. You may definitely want to work with someone who is highly qualified and experienced. Contract price and quality of construction can vary from contractor to contractor, so you are advised to take interview of several contractors in order to compare bids and then select the right contractor who makes you feel most comfortable.

3. Find A Reliable Lender:
It’s just like choosing the right contractor, selecting the right lender for financing your construction project is important. It can save your lots of time and money. Saving money on your financing allows you to put more money into your new home. Magna Capital Group, Inc offers competitive financing options that save you money. We help people build their dream homes. We make the process of getting a home construction loan as easy as possible for you and your contractor. Below are some exciting features of our home construction loans:

  • One application, one approval, and one closing—saving you time and money
  • Loans up to $5 million available
  • New home construction periods up to 12 months
  • And more!

4. Lower Building Costs With Sustainable And Clearance Materials:
Using recycled building materials can help you to save money and it’s completely Eco-friendly. Also, you can look for clearance products, such as floor models, reconditioned appliances, and discontinued models and products in order to lower your building costs.

The Bottom Line:

This article teaches you how to prepare for a new home construction project. Choosing the right contractor and lender can make your home construction project success and joyful.

Magna Capital Group, Inc. offers a number of construction loans designed to help you finance the building of your new home. If you are ready to start building your new home, Call us at (310) 734 4044 or email at info@magnaloans.com to learn more about home construction finance for your situation.


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    Although Magna Enterprises, LLC and Magna Capital Group, Inc. are referred to throughout the text of this website as Magna Group of companies, they are not affiliates, parent or subsidiary companies as both companies are separate and distinct entities. Any questions or issues regarding this disclaimer should be addressed in writing c/o Shawn Molem.