What is a Construction Loan?
A construction loan allows builders of homes and commercial structures access to funds necessary for building. A construction loan supplements the amount that a builder put forward to finance a project. This allows the builder the ability to use their excess capital in other building projects.
Loan to Cost
One form of a construction loan is a loan to cost. This type of loan assigns a percentage of the cost of construction to the builder, usually 15 percent. This provides a way for the builder to establish an interest in the outcome of the construction by making them liable.
Draw
Many lenders to ensure that a builder uses funds in order to complete the building use a draw. The draw works by requiring the builder to apply for the funds needed for a construction project at the time of the project. The builder is limited to only the amount needed for the given phase of construction and no more.
Student Loans
- 3 Factors that Contribute to Fluctuating Interest Rates on Student Loans
- What are the Consequences of Defaulting on a Federal Student Loan?
- What Happens when You Default on a Private Student Loan?
- Federal vs. Private: Comparing Student Loan Interest Rate
- Can You Get a Private Student Loan with No Cosigner?