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Do brokers work with construction loans?

Trying to avoid going through a bank or CU so as to not get the "one size fits all" approach. A couple of brokers I've reached out to say that most brokers don't deal with construction loans. Is this true? If so why?Also, any thoughts on lending tree or quicken?I'm in Indiana and looking. Thanks! by Asmith924 from , Illinois. Jan 9th 2014 Reply


Sam Perez (SamPerez)
#48 ranked lender in Illinois - 34 contributions

Thanks for your question. It depends on the Loan Officer and/or Company they work for as well as the type of loan you need. They are devided by 2 categories: Commercial (construction / rehab)) and Residential (rehab). Commercial Loans are made by lenders to fund different types of projects - from new construction and multi-unit rehab projects to even residential property, they are underwritten differently, primarily equity based as well as on the individual's experience. Their Residential counterpart are only for residential property and are underwritten to FHA, Fannie Me and Freddie Mac guidelines. Some loan officers and/or mortgage companies only focus on one of the categories however others focus on both. I hope that helps. For more info please feel free to contact me, thanks!. -Sam. go to www.silvercreekfinance.com

Jan 9th 2014
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Hi, I'm referring to a residential construction loan. Thanks!

Jan 10th 2014
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Sam Perez (SamPerez)
#48 ranked lender in Illinois - 34 contributions

Then, I'm not sure why they told you that. Most mortgage companies should be able offer consumer rehab loans through their current list of investors but then again not all mortgage companies are created equal. If you would like me to take a look at your scenarion please feel free to contact me directly. Thanks! -Sam. www.silvercreekfinance.com

Jan 10th 2014
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James Barath (JamesBarath)
#10 ranked lender in Indiana - 351 contributions

In years past, construction loans taken by the consumer was prevalent. Since 2009, not so much as banks are less willing to lend on land for homes to be built and homebuyers have insufficient money into the transaction. Even if you could find a broker to originate a construction loan, why would you want to take all the risk? If you would like to discuss further, be free to contact me as I service the entire Chicagoland market and am based out of Crown Point Indiana. Happy New Year!

Jan 10th 2014
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James, Can you explain, "why would you want to take all the risk"? Not sure I follow. I assumed It was close to a regular mortgage loan. 10-20% down at closing? What extra risk is there?

Jan 10th 2014
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Joe Metzler (JoeMetzler)
#2 ranked lender in Minnesota - 3,852 contributions

Most lenders work with most loan programs, but not all lenders work with all programs. Doesn't matter if it is a bank, broker, or mortgage company. Do yourself a GIGANTIC FAVOR... For a great experience, go to the local lender down the street, and stay as far away as possible from the big online lenders - especially for a purchase transaction.

Jan 10th 2014
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,550 contributions

When home values are on the rise, and the price you negotiate for a new build results in a higher appraisal 9 months later when the home is finished, then that's a Win-Win for everyone.. however, with this same scenario, but the market collapses, as it did in 2006, then lenders who had given out construction loans were faced with a dilemma.. the property did not appraise, and the borrowers were underwater before ever moving in. To get a mortgage, they would need to payoff the construction loan, and pay down the balance to an acceptable Loan to Value required for mortgage financing.. Needless to say, most of these folks did not come up with the extra cash to satisfy these requirements and opted to get foreclosed, and the lenders issuing these loans took the hit.. this scenario played out tens of thousands of times recently and has made most lenders gun shy... Very, very few lenders are offering construction loans right now.. but your best bet is to talk to a LOCAL lender.. someone you can actually walk into their office and sit down with.. .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 10th 2014
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James Barath (JamesBarath)
#10 ranked lender in Indiana - 351 contributions

If you would like to discuss further, I can be reached at 219-662-0166 x21.

Jan 10th 2014
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