Looking for a Arizona Construction Loan? 3 Questions to Ask Yourself
Ready to build your dream property? It might surprise you to learn that you have more options than just a traditional mortgage; an Arizona Construction Loan may be another route to your real estate dreams.
Loans for new construction work differently than a mortgage for an existing property. Traditional home loans use a home’s condition, comparable properties, and appraisals to determine rates and terms. Usually, they come with interest rates in the 3-10 percent range and last for 15-30 years. Arizona Construction Loans offer shorter terms and higher interest rates, primarily because the people using them build a property and sell it quickly.
There are two types of Arizona Construction Loans. There are the kinds you get from an institution like a bank or credit union and there are ones that are funded by private money.
Choosing Between a Traditional and a Hard Money Arizona Construction Loan
These three questions will help you decide which type of loan is right for you:
- How fast do I need the money? It’s the truth — construction is all about budgets, time-crunches, and deadlines. If you have a month or two to wait for your funding to get the project started, a conventional bank loan will work just fine. If, on the other hand, you need the money quickly so you can start getting work done and stay on schedule, a Arizona Hard Money Loan may be a better option. Whereas a bank loan typically takes at least 30 days, a Arizona Hard Money Loan can be in your account in as little as a week.
- What do I qualify for? With a loan from a big institution, you’ll need to provide proof of income, show that your credit score is at least 700, and demonstrate that you have no blemishes in your financial life. Arizona Hard Money Lenders use collateral to secure the loan, so they’re able to work outside the one-size-fits-all system.
- What loan structure works for me? Bank loans are fairly inflexible. They have rates and terms that are essentially set in stone, which doesn’t give you a lot of space to tailor the loan for your needs. A hard money lender uses private funds and isn’t bound by the same restrictions. They can structure the loan to work well for each unique situation.
Finding a Hard Money Lender in Arizona
If you’ve weighed the pros and cons and decided a hard money Arizona Construction Loan is the right move for your circumstances, you’ll want to sit down with a private money lender in Arizona. He or she can listen to your plans and help you figure out the best course of action.
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