You can apply for new construction loans in Arizona from two lenders at once. However, you should be aware of the benefits and drawbacks before you do.
Most people building homes or businesses won’t qualify for traditional funding. Instead, they’ll take out new construction loans, which are short-term options sometimes referred to as self-build loans. They’re commonly leveraged by individuals who are having a custom home built as well as by the builders themselves. Once construction is complete, a new loan, often called an end loan, is taken out to pay off the initial one.
However, getting the initial round of funding can be a little tricky, simply because banks consider construction-related ventures to be a bit risky. After all, if the project isn’t completed or something goes wrong, the bank is left with a property it may not be able to sell and a mess to clean up. This in mind, interest rates and costs associated with closing tend to be a bit higher than with traditional mortgages, so eager would-be borrowers often want to consider all the options before committing to one.
Because of this, it may make sense to apply to two or more lenders at once. You’ll be able to compare the options and choose the one which makes the most fiscal sense or let your lenders know about other offers you’ve received to see if they’re able to sweeten the deal enough to sway you.
Beware: Too Many Checks Harms Your Credit
“Most Credit Scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time,” says Fair Isaac Corporation creator of the FICO score. The organization says it takes special care to account for rate shoppers and that people are not typically dinged for multiple checks within 30 days for things which people typically rate shop for. The catch: new construction loans in Arizona are technically not mortgages, which means if you’re applying to multiple lenders and they’re all pulling your credit score, you could get nailed. Although the average is less than five points per check, FICO cautions that those with fewer accounts or a short history may be hit even harder.
Avoid the pitfalls of multiple checks and find a broker who will go to work for you.
One of the best ways to get new construction loans in Arizona is to find a broker who specializes in hard money loans. Oftentimes, private lenders with a background in the industry specialize in this type of financing because they know it well, which allows them to analyze it with more confidence than a bank might. Going this route, it won’t matter if your credit is bad to begin with and your broker will put in the work to find you the best possible deal. That’s it. No more endless shopping around and you get the financing you need. If you’re an avid builder and have a great experience, try to work with the same team for future projects as well. In doing so, you’ll not only get a fantastic deal, but will streamline the process too.
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.
© 2016 Level 4 Funding LLC. All Rights Reserved.Copyright | Privacy Policy | *Terms & Conditions
No comments:
Post a Comment