What’s the saying about our best laid plans? Even with the best intentions and the most detailed preparation, they can sometimes fall off course. The same is true of home builds.
Whether the cost of construction has exceeded your expectations, the scope of the project has changed, or you simply lost your funding, you may be finding yourself in a place many have been before: In a pinch to find cash so your project doesn’t stall.
This is where a mid-construction loan can help. If you’ve already started building – even with materials ordered and crews on site – financing could still be available, depending on your project and qualifications.
What is a mid-construction loan?
A mid-construction loan is a type of construction loan designed to provide the capital you need to bring your project to completion, even after it has gone vertical.
This is especially helpful during stressful situations like:
- Cost overruns
- Material delays
- Unforeseen site conditions
What do mid-construction loans cover?
All expenses related to construction, including the costs of land, labor, materials, and permits, can be covered by mid-construction loans. However, these loans do not include design costs like fees from architects or decorating costs like landscaping or furniture.
Some mid-construction loans also allow borrowers to be reimbursed on existing project costs so long as certain guidelines can be met. This is based on keeping the project’s Loan-to-Value (LTV) and Loan-to-Cost (LTC) at responsible ratios that won’t bury the borrower in debt later. An LTV compares the loan amount to the anticipated market value of the completed project, while an LTC compares the loan amount to the total construction cost for the project.
Where can I find a mid-construction loan?
Because traditional lenders like banks often consider construction loans as “high-risk” or “too complicated,” consulting the services of a private lender may be your best bet for a mid-construction loan. Private lenders are often able to offer more flexible requirements and quicker funding draws to get project timelines corrected.
How do I secure a mid-construction loan?
Private lenders require you to submit an application for your mid-construction loan that includes building plans/specs, a project timeline and a budget for the project. We will also need to pull credit as well as review income and asset documentation to determine long-term loan qualification. If approved, the loan can identify remaining project costs, as well as potential reimbursements for some already purchased items.
If you find yourself in need of financing after breaking ground, call Legacy about our Mid-Construction Loan. Especially when a build is already in motion, we know that time is money and that’s why we provide expert support to get you funding fast. We’re here to talk: 425-635-4700
