Project Financing On Construction Loans?

Fortunately, most new construction loans also include project financing. There are construction loan programs nowadays that combine both the funds needed for the constructions and the ones needed for completing a residential construction project. You may wonder what are the different costs that these loans cover for and what information does the project need to include so as to guarantee its approval and the loan's disbursement.

Information Needed For Appraisal Of The Future Property

Since with this kind of loans you need to know the value of something that hasn't already been built as opposed to mortgage loans where the appraisal is easier because the property already exists, some information will have to be delivered to the appraiser and the lender so as to let them figure out what the final worth of the property will be.

Basically, in order to obtain a proper appraisal of the future property you'll need to provide information regarding what is going to be done and what materials are going to be used, how much the materials will cost, etc. Additional costs like the ones related to the contractor, plans and authorizations must also be included in order to provide an overall idea of the costs of the project.

Information Needed For The Loan Approval

As regards to the documentation needed for the approval of the loan, the issue is more complex. As with regular loans, you'll need to provide both income and credit documentation to prove you are trustworthy. Income documentation requirements may not fully apply on stated income construction loans but a credit check will always be run.

Also the lender will require a credit check on the contractor that will take on the construction project so as to make sure that the contractor is also trustworthy and that there will be no problems or delays on the construction. Most of the documentation requirements from the contractor will be then handled by the contractor and the lender without your intervention.

Loan Amount And Limitations On Stated Income

Depending on whether you can show proof of your income or not, you'll be able to obtain higher or lower loan amounts. The loan amount will also depend on the applicant's credit score and history among other factors. Stated income construction loans don't have limitations on the loan amount but on the loan to cost ratio thus requiring a reserve for the costs and contingencies of the project.

It is possible to obtain up to $2,000,000 or even more with some lenders but it will all depend on your credit report records and the feasibility of the project. The loan to cost ratio can reach up to 95% of the projected value of the property which implies at least a 5% reserve to cover for the rest of the costs of the project and any unexpected expenses.

Unsecured Loan for $50,000

If you are looking for a big solution to your financial problems in the neighborhood of $50,000, friends or family or traditional lenders may not be willing to come up with that kind of money. Banks are pulling a credit crunch with very strict lending requirements because of the recent economic downturn. Couple that with a less than sterling credit rating and your chances of getting a loan from such a traditional lending institution is next to impossible.

Shift Your Focus and Heed These Four Points

If you are in need of a substantial sum, such as $50,000 to get yourself out of your uncomfortable financial situation, you need to shift your focus to private lenders. When you approach such a lender, keep these four points in mind.

Point One – Find Three Accredited Lenders via the BBB

A good way to start is to find the three best accredited private lenders you can find. A good source is the business directories of the Better Business Bureau. These directories show you the private lenders who will offer large unsecured loans and will give you rankings as to how they have treated their past customers.

After you have chosen the top three, start making phone inquiries. See what the requirements are to obtain a $50,000 loan without any collateral. The representative should recommend some unsecured personal loan packages to suit your financial needs. This up front counseling should be free of charge. A lender who asks for upfront money is not a lender you want to use.

Point Two – Choose Wisely

Choose a suitable personal loan package wisely. Your cost will be higher than for other secured loans because of the risk involved in this type of loan. To offset this risk, private lenders usually require interest rates that are somewhat higher than those offered by traditional lenders. Still, shop around to find the lowest possible interest rate as well as monthly payments that are affordable regarding your financial situation.

Point Three – Prepare Your Account

You should have your banking account ready to accept such a large sum of money. Your lender will want to transfer this large sum directly to your account, the safest procedure for large amounts. If you currently have outstanding payments linked to your account, you may want to transfer those obligations to another account so your money is free and clear in the account you will use for the transfer. Be sure the account remains active during this procedure.

Point Four – Have Your Bona Fides In Order

Once you have chosen an appropriate lender, you will need to supply all your personal particulars. These will include documentation such as a bona fide document of identification, proof of residency, banking account information, employment information, and other information required by your particular lender. Before you sign anything, make sure you have carefully considered all rates, terms, and conditions of the loan.

Do Not Forget the Future

If you have no real estate or other large valuable collateral to present, applying for a large, unsecured personal loan is your best avenue if you have the need. As with any loan, but particularly with a loan of this size, be sure you have the financial wherewithal to meet your loan payment obligations when they come due.