What are the important points to negotiating a Construction Loan?
(1) Employ a lender who has a lot of experience in providing Construction Loans. (2) Find out what kind of support the lender will provide during the construction process. Most lenders will conduct periodic inspections to determine the progress of construction, and will handle progress payment requests from the contractor. (3) The planned duration of a construction loan is critical. Always request more time than you think it is going to take. Construction is a very uncertain process, and is subject to many events that can delay the progress of work. You can also ask the lender to provide you with agreed upon extensions of the time on the loan. You need to do this up front. It is much more difficult and expensive to request an extension of a construction loan beyond the agreed upon time. For example, extending the term of a construction loan will usually require a new appraisal. Particularly if market conditions are in decline, this can result in increased loan costs, reduced loan amoun
