How is a construction loan structured?
Construction loans are usually structured for a maturity of 6 to 12 months depending on the anticipated completion time of the project. During the “construction phase”, the Promissory Note calls for “interest only” payments on the money actually outstanding against the Promissory Note. On the first of each month, Church Extension will mail an invoice to the congregation indicating the amount of interest owed for the previous month. At the time the construction is completed and the full amount of the Promissory Note has been drawn, the loan will then be converted to regular monthly payments of principal and interest.
