Construction loans may be availed for residential as well as commercial purposes. Commercial construction loans are of the following types: acquisition and development loan, mini-perm loan, bridge loan, take-out loan, construction interim loan, joint venture loan and real estate purchase loan. Residential construction loans may be construction-only loans or construction-to-permanent mortgage loans. People may refer to the article titled, ‘Types of Construction Loans’, for further details regarding the different types of residential and commercial construction loans.

Construction Loans – How They Work?

Working of Commercial Construction Loans
Business persons can avail commercial construction loans, provided their operating history inspires confidence and provides the lender some semblance of comfort when it comes to the repayment of the borrowed sum. The lender carefully scrutinizes the following ratios, viz. loan-to-appraised value of the property ratio, the debt service ratio and the net worth-to-loan size ratio, before sanctioning the loan. Read the rest of this entry »