It can be a crazy world out there.
Everyone can have their own interesting slant on what to build or what will sell in the world of construction. And some of the more creative designs and concepts have been known to be very lucrative.
But if you have a non conventional project in mind, and you happen to be able to secure a construction loan to build it, don’t be surprised if a construction take out mortgage may be difficult or impossible to get.
It’s the whole beauty in the eye thing sometimes when it comes to some of the projects that get completed. The problem though is that if a long term lender doesn’t believe there is a market for the more unusual, then you could be left scrambling, trying to pay out the construction loan before the lender ends up being the owner of your property.
One of the more common situations where this can become a problem is on an acreage or large lot where more than one building gets created, each with potentially different uses. From the builders point of view, this may be very practical and economical on a lot of levels, but from a take out mortgage lender point of view, the property and one of the buildings will likely be assessed for market value with the other non related building being completed ignored, regardless of its condition and functionality.
That’s why its always a good idea to at least scope out the market for a take out mortgage before the project commences even if one is not required at the beginning of the project by the construction mortgage lender.
Checking out the long term mortgage market is also an important exercise if you are planning to sell the completed project and property as it will give you a sense of whether or not your prospective buyer will be able to secure the long term mortgage required to complete the sale.
Mortgage lenders have definitely become more selective lately, so it would be considered wise these days to not leave long term financing up to chance later on in the project as you never know if and when a commitment may be forthcoming for funding to pay out the construction loan.
Click Here To Speak to Construction Mortgage Broker Joe Walsh