As we have previously discussed, there are 6 basic types of construction loan mortgages that you can acquire for different stages of a construction project.
The 6 construction loan mortgage types are:
While a typical construction project can require 2 or 3 of these construction loans during the time of elapsed time between planning and completion, the sources of funding can also come from different types of lenders.
From a lender category point of view, there are basically institutional construction mortgage lenders, and private construction mortgage lenders.
Both privates and institutional lenders can provide financing for any of the the 6 different types of construction loan mortgages listed above. And for any given project, there can even be some combination of institutional and private lenders providing the collective construction financing requirments.
Even within these categories, there are many sub lender categories with respect to construction mortgage financing.
Within both the institutional lender group and the private construction mortgage lender group there will be specialization in only one or two areas of construction financing, and for larger commercial projects, the specialization can become more specific with respect to type of project and geography.
Private mortgage lenders in general are very regionally based for the most part which also lends to their strength as a lender in that they have a greater understanding of the local market in which they operate versus a national institutional lender with an area office in the same locale.
To say there are may slices to the construction financing market place would be a broad understatement. Depending on the nature of a project and how well it progresses within its project plan, the construction financing structure can get both complex and convoluted with several different lenders involved during the course of the project.
As the dollar value of the project increases, it makes a great deal of sense to be working with a construction mortgage broker that has a construction financing focus for your type of project, in the area where construction will take place. This may cost you a few dollars in brokerage fees, but compared to the money you can lose if construction financing for a stage in the project falls apart or is required on short notice to keep the project going, the return on investment can be considerable.