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Index Funds are Your Friend - Every stock market or stock exchange offers indexed funds and these index funds are more beneficial to you as a new investor as they...

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New Construction Financing

New construction financing is basically availing loan for a completely new project or a green field project. The new construction could be a home, business property or a commercial property. There are lots of lenders who are willing to give loan for new construction financing. The following are some of the facts relating to new construction financing:

1. The buyer who is borrowing the money should have a very good credit history. He must not have any dues or outstanding payments towards other loans of his, if there are any.

2. If the buyer is borrowing for a home construction, then he should have hired a reputable builder for that and if the builder himself is borrowing for a commercial project, then he must have been an experienced builder and should have got excellent reviews or comments for his previous projects.

3. For the buyer, there are lots of choices to choose from as far as the period of the loan is concerned. There are construction loans available for fifteen to thirty year period.

4. One can even avail a fixed one year loan. During this one year, the construction of the project should have been finished and once it is finished, the borrower can mortgage the finished property with the lender and pay the remaining amount in installments over a period of time.

5. Try to find out what would be the actual value of the land and the project after the construction period is over. This would help you to estimate the amount of loan that you should be taking keeping the profit margins as well as the cost of construction in mind.

6. Make sure you maintain a separate reserve for future contingency costs. You never know what will happen in the future. There are chances of some unfortunate incidents or accidents happening in the future which would affect your business and at that time you would be in need of funds to get that problem solved in order to ensure smooth functioning of the construction project, so when availing the loan from a finance company, a portion of the loan must be allocated to this reserve.

7. Never rush up with new construction financing. Before going for a new construction finance loan, try to browse and find out what are the options available in the financial market. Look at each of them, see their offers, rate of interest, repayment policies and then try to find out which would best suit your requirements.

Discuss It!

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New construction financing is proving really good in favor of customers and many people get loans from this. I really like your way of sharing the post for us.

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