Many people believe that a loan specifically tailored to the work you are doing should be superior.  Construction loans do have some definite advantages such as you often only pay interest on the amount taken out as the work progresses, but these types of loans are often more expensive and may need to be refinanced when the project is complete.  

We have found that with larger projects, construction loans make more sense and they may be the only option available as they can take into consideration the property value after the work is complete (future value) in contrast to most standard property loans which are based on the value of the project before the work has started.

Construction loans also require funds to be released only after an independent inspector has observed the progress.  This can be viewed as either an advantage to protect the client or a disadvantage in delaying the release of funds to the contractor who might in turn not be willing to continue until paid for the work already completed.  Each project and situation will determine the ultimate benefit of a loan inspection process.


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