How to get a construction loan in this new economy
Created on Monday, 24 March 2014
"I want to build a home, but can't get a construction loan. What should I do?"
Many banks have gotten out of construction lending, or are charging very high rates when they make a loan. Banks have gotten burned. Regulators keep regulating. They now require banks to keep larger loan-loss reserves, and are further diminishing the lien rights of banks in foreclosure situations. So what's a qualified borrower to do?
Answer: find an long-time, established local builder who survived the downturn, and has good relationships with at least one local bank. Chances are that that bank will make both a construction loan and an end loan in a pre-sold situation, because of their good relationship with the builder.