How Do You Calculate Construction Loan Payments?
Construction loans are relatively simple in theory, but tend to be much more complex in implementation. To help your budget calculations, this article will explain how they work and how to calculate construction loan payments during the construction period. Most construction loans require interest only payments during the construction time frame and will adjust to include principal, also, after full dispersal. Review your construction loan disbursement schedule. Some lenders prefer – or may mandate – simplicity (it’s less work for them). This may or may not be good for you, too. They may establish only three equal disbursements (30%) with a 10% “hold back” to be paid after a final inspection. Other lenders will allow you to set a schedule that works for you and may include five, six, or more disbursement amounts. This gives you access to funds to pay subcontractors and other charges more frequently. Understanding your disbursement schedule helps you estimate and/or calculate your comin
