Since the last construction downturn in 2008, lenders have considered construction loans a risky business proposition. Their requirements for borrowers including work history, creditworthiness, and money down are set in standards that are not negotiable. Typically, traditional lenders offer three different types of construction loans. One is a construction-to-permanent loan. In this type of loan, banks pay the builder in different stages as the construction is complete. At the end of the building process, the loan is converted to a mortgage. The second type of bank loan is a construction-only loan. These loans simply cover the costs of construction and are due in full upon completion. The third type of loan is a renovation construction loan—often used by those that are in the fix-and-flip investment model. This type of loan allows you to add the projected cost of the renovations into the mortgage, as well as the purchase price.
All of these loans are based on draws—paid at specified times during various construction phases. Banks will send an inspector to the construction site in order to ensure that the contractor has completed the phase and is on schedule. Besides monthly draws, these loans typically offer interest-only payments during the construction process. At the end of the loan term, usually as construction is complete, the full payment on the loan may be due. These loans are short-term in nature, though there is usually greater flexibility than other types of loans.
One problem contractors find with these types of loans is that they are harder to qualify for and banks will want to see a history of completed projects. Builders usually require a credit score of at least 680 percent and a down payment of at least 20 percent is required. Because of the difficulty in obtaining these loans, and the extended time to funding, contractors often turn to Arizona Hard Money Lenders.
Builders turn to Texas Hard Money Lenders for a variety of reasons. These include a quick approval and funding process that takes a week instead of a month. Another reason is that they are easier to qualify for. Whereas traditional lenders require specific credit scores, Arizona private lenders look at how much equity you have invested in the property with this carrying greater weight for both qualifying and amount. They will also consider additional assets. Because they are not government regulated, Texas Hard Money Lenders have greater flexibility when it comes to terms and repayment schedule.
At Level 4 Funding, we offer construction loans that are easy to qualify for with limited paperwork involved in the process.
Working with a company that has hundreds of Arizona private lenders in their rolodex, guarantees you the best chance of obtaining a construction loan, whether your first project or if you’re a seasoned veteran. There is no minimum credit score required and we offer some of the quickest funding in the industry—sometimes in as little as 24 hours. We offer interest-only payments with terms that range from 3 to 60 months. Call us for a no-obligation quote.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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.