While a construction loan from a private mortgage lender is typically the most common type of construction loan issued, for those that want to try and take advantage of the lower rates offered from bank or institutional mortgage lenders that finance construction, a private construction loan can be a good second option as well.
Part of what I mean by second option, is more like option waiting in the wings or even a contingency plan if you will.
One of the challenges with securing and effectively utilizing a bank or institutional construction loan is being able to work through all the administration requirements that come with this type of funding. Even when things look fine on the surface, you can be on draw request from being in all sorts of trouble trying to get your institutional construction loan functioning properly.
This is why it can be a benefit to you to scout out both your best bank and private construction loan options prior to signing up for anything.
In that way, you always have a back up plan in the ready if required.
If you don’t want to go this far with respect to fully planning out an contingency for construction financing, then the next best alternative would be to look in to private construction loan sources at the very first sign of trouble with your bank construction loan.
Signs of trouble could include having trouble getting the first draw advanced, having draws reduced, and so on.
The good news about a private mortgage construction loan is that it can be put into place rather quickly, so even if you need to change horses right in the middle of a project, you can do this in about seven to ten business days, provided everything is in order.
There is potentially nothing worse in the construction world than having to scramble around to make cash flow work in the middle of a construction project when your time is supposed to be dedicated to managing the project.
Having both Plan A And Plan B in place will take a bit more of your time, but can save you time and money if something does go wrong with your construction loan provider sometime during the project.
If you’re in need of a construction loan for a project you’re planning, or one that you’re currently in the middle of, I suggest that you give me a call so we can go over your requirements together and discuss both bank and private construction loan options that are available to you.