Arizona Construction Loans: How to Risk Less by Avoiding Extension Fees

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Brandon-Abney-Arizona-Home-Mortgage-FHA-Specialists-150x150If you are in the middle of building a house for yourself or you are in the middle of a renovation project, you need to know that with Arizona construction loans, there is an ugly little thing called extension fees. Learn why you want to avoid extension fees and some strategies to keep your project on track.

With construction projects, loans are distributed through a pay-as-you-go approach. You get a specific amount to pay for each step of the project, but you rarely get the full loan amount up-front. Most loans for residential construction projects last 12 months, but if your project stalls then extension fees come into play.

Extension fees are unfair in principle. You’re basically paying extra money to get access to money that is already yours in the first place. Yes, this practice may seem unjust, but these fees exist nonetheless, and it is in your best interest to learn how to avoid them.

The first way to avoid these fees is to scrutinize the terms of your loan and see if extension fees apply in your case. If they do apply, you need to plan your project carefully.

With Arizona Construction Loan, Extension Fees are a Danger you want to avoid.

Extension fees can eat away at your project’s budget.

If you can’t finish a project on time most often your lender is more than willing to extend the term of your loan. But they will likely charge you X amount of dollars each month until your project is finished. These fees are usually drawn from your remaining loan balance.

Slowly but surely these fees can eat away at your projects remaining budget. Month by month the money you have on hand to actually finish your project slowly withers away. In the worst-case scenario, you might not even have enough money to finish your project. So what are some tips to avoid this nightmare?

With an Arizona Construction Loan plan ahead to avoid the danger of extension fees.

First, you need to plan for the most common reasons any project gets delayed:

  • Permitting problems: Ponderous bureaucrats with clipboards can stall your project for several weeks. Do your best to ensure your property is up to code to avoid this situation.

  • Weather problems: Rain, mud and generally miserable weather can keep any work from getting down on your construction site. There is really no way to avoid this, except for ensuring that work is carried out during a generally favorable season.

  • Contractor issues: grumbling or lazy contractors may not finish the work you asked them to perform on time.  Only work with the most reputable contractors to ensure your project stays on schedule

  • Plan Revisions:  the other issues listed are generally beyond your control. But you can develop a clear plan and stick to it!

No doubt every project will have its delays, so you may want to have little extra money on hand to cover unforeseen costs. But above all, have a clear plan, swear by whatever you hold sacred not to divert from that plan and you can avoid extension fees.


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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