Construction Loans for Homes

Finding construction loans for homes is not as easy as finding a regular home loan. This is because you are borrowing money for something that doesn’t exist yet. To find the right loan program you will need to shop around, and ask many potential lenders a lot of questions about loan terms, rates, and requirements.

After you find a lender that offers construction loans for homes it is a good idea to start the pre-approval process. This process is a short handed version of what you will need to go through to get officially approved for a construction loan. This process will usually involve the lender asking you questions about your credit history, your FICO score, what type of collateral you have, and what type of property you plan on building. The lender will then use this information to determine if you qualify for any of their loan programs. If you are pre-approved for a construction loan then the lender will give you a dollar range of what you are qualified to borrow for your project. They will also tell you what interest rates and terms are attached to the loan programs that you qualify for. You can then use this information to find a property, architect, and contractor. However, to actually get the money from a construction loan the information that you provided to the lender will need to be verified. This is the qualification process.

If you are interested in construction loans for homes for a commercial project then you will need to look for a lender that offers real estate development loans. These loans are specially designed for providing real estate developers with the capital needed to complete their real estate projects. The benefits of these loan types are that they offer flexible terms and rates. The drawbacks of these loan types are that they are difficult to find, they can take a long time to put together, and they may require a large amount of collateral to qualify for one.

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Home Buyer Beware - Who's Watching the Construction of Your Home?

In 2005, over 1.2 million new single family homes were built and sold in the U.S. That’s new houses being built by thousands of large and small contractors. And the number one complaint is that the quality of the work was less than satisfactory.

In fact, if you bring up the word “contractor” at any cocktail party, everyone has a horror story to tell. If you’re having a home built, you start to wonder, “Who’s watching the construction of my home? Who makes sure it’s built right?”

Most new homeowners I talk to say, “Well, isn’t the local building inspector taking care of that?” Yes, to some extent they make sure the house is built right - but only from a building code standpoint.

Remember that the building codes are minimum standards your builder must follow. For example, the code says that a bathroom exhaust fan must provide a given number of air changes per hour for a given size of bathroom. The code doesn’t care how noisy the exhaust fan is.

The codes cover design criteria that are intended to keep your house from failing structurally. Codes also emphasize life safety issues, to protect you if you are not smart enough to know that you shouldn’t use your hair dryer in the bathtub.

It’s what the building inspector does NOT inspect that you should be concerned about. Rarely do they climb onto your roof to see that the roofing shingles are installed properly to prevent them from blowing off in the first wind storm. I don’t recall ever seeing any local code inspector check to see that the tile around your shower has a moisture barrier to prevent mold problems later.

If the building inspector is not watching your house construction, then your builder must take responsibility for the other 10,000 opportunities to build things right (or wrong). Many of the biggest builders in the country have internal inspection systems to ensure their homes are built right, but many do not. Some builders use third-party inspection organizations to check some of the structural items that the code inspector does not check.

Chances are, your new house was not inspected to the extent that you will be satisfied. What can you do?

The number one solution is to educate yourself and don’t be afraid to ask questions if it looks like something is not right. One of the easiest ways to do this is to get copies of the installation instructions from the manufacturer of the products being installed on your house. Many are available on the Internet at the manufacturer’s Web site.

Another way you can protect your investment is to hire an independent inspector to periodically check the work in progress. This can be expensive, but it’s a bargain compared to what lawyers working on the problems that occur later may have to charge per hour. Check out the inspector’s qualifications; some home inspectors may be knowledgeable about new construction but may lack the experience needed to do a thorough examination.

People often hire inspectors after the house is built, just before they close on the sale. Houses must be inspected as they are built. Most inspection people are hired too late in the process, when the most important things are covered up or are difficult to fix.

Ask your builder if he uses an independent inspector. How often and at what milestones does he inspect the home? Are there inspection reports available for you to see?

Homeowner beware: don’t assume that your home is being built right. Take control of the outcome by educating yourself about construction practices and making sure your new home gets the quality focus you paid for.

Gary is an independent construction quality advisor. He visits hundreds of housing job sites a year, coaching, auditing and generally raising the bar on quality. Gary is also the primary author and producer of the website at http://qcfocus.com

Construction Industry: Women Armed and Dangerous Have Mediators Frustrated

In the recent years, women have transformed from homemaker to a builder and ultimate decision maker in hiring contractors. This trend has been caused because of the labor shortage in the construction field and increasing number of households headed by single women. The introduction of women into this field can be a barrier for the construction mediator in resolving disputes, where for years the field was dominated by men. Mediators have to recognize that men and women negotiate differently. If the mediator uses the ‘one size' fits all approach, his mediation will go down in defeat.

Research has shown that women out perform men when they are negotiating on behalf of someone else, such as a client or on behalf of an employer. Women more often than men take a ‘collaborative' or cooperative approach to negotiation that has been shown to produce agreements that are better for both sides. Women are more likely than men to listen to the needs and concerns of the other side, communicate their own priorities and pressures, and try to find solutions that benefit all parties-to find the win/win solutions. This approach not only leads to better outcomes for everyone, it often produces creative solutions to problems that might have been overlooked by men taking a more competitive or adversarial approach. Also, by looking for those win/win solutions, women tend to preserve and enhance long-term business relationships-they don't burn as many bridges as men who focus on short-term gains. Women work harder, smarter but do not boast about their accomplishments.

Armed with increasing knowledge, experience in the building industry and their different negotiation skills, women can pose a different barrier to the male construction mediator. Women are more collaborative or cooperative in mediation and to many mediators this may signal that the woman is not proficient on the expert subject matter or are caving in because they or their client is liable. Many mediators discount what a woman in the construction field has to say and invariably pressures them on giving more money to settle or to drop their demand. This immediately creates a barrier for the mediator, because a woman is incensed by this type of treatment and will become more resistant to settling. Mediators are impressed by a man's aggressive behavior, who mandates that they or their client did nothing wrong, who tells war stories on what a great builder or attorney they are, and will not budge off their position unless a mediator tells them to the contrary. The mediator assumes that the male has a better handle and superior knowledge on subject matter and a woman's style of negotiation confirms the mediator's bias.

How can a mediator handle the different negotiation styles of a woman in construction mediation?

Women who are the homeowner party during negotiations are much less likely than men to ask for what they want and to use negotiation as a tool to promote their own desires. In this situation, a woman will listen to the needs and concerns of the other side, communicate her own priorities and pressures, but be aggressive in pushing her demands. Women are aware of their shortcomings and will usually have a representative or attorney make demands on their behalf. This does not mean that the "attorney is acting as the party" or the "woman does not have a grasp on the cause of the defects," rather it means she is the brain behind the action. A mediator should not become frustrated because the woman homeowner will not speak to him about her demands. However, a mediator should engage in a discussion about the issues in the case. Having a meaningful discussion about the issues will cause a woman to reframe her demands to her representative/attorney.

Women who are acting as the representative for their employer builder/contractor are savvy negotiators. Their negotiation style is different, cooperative, and collaborative and is seeking win/win solutions for all the parties. Mediators may feel that they are trying to usurp their role as the mediator, ignore the woman's discussion on how to resolve the action and limit the discussion to monetary demands. Mediators should not be condescending, engage in the discussion and then walk out of the room and tell the other participants, who happens to be males, that the woman does not have a grasp on the issues. Take her solutions seriously, bolster her credibility to the other male participants and present her ideas to the other participants. If you shut her discussions down, you will create a permanent barrier and your mediation will end without a settlement. Remember that women work harder, are smarter but do not boast about their accomplishments or expertise.

By Elizabeth A. Moreno, Esq., a Los Angeles attorney , arbitrator and mediator, who sucessfully resolves complex disputes involving construction defect issues.

Using Reclaimed Wood in Home Construction

Frugal Yankees have been doing it for centuries-cannibalizing old buildings and incorporating the material into new ones. Wood from old barns has been used to build new barns; doors and windows have been taken out of demolished homes and recycled. Even once luxurious resort hotels in upstate New Hampshire and other New England states, long closed, have been torn down, the material finding its way into residential homes all over the Northeast.

What is different is that now architects and interior designers are purposely incorporating vintage building materials into their plans. Barn boards become wide plank flooring, intricately carved mantels add a focal point in the rooms of new homes, and architecturally interesting crown molding and windows are recycled into new construction.

The practice makes sense both aesthetically and environmentally. Traditional architectural details in mint condition reflect a workmanship unequalled in today's machine-tooled era, while every piece of fine hardwood salvaged from an old building means one less piece needs to be harvested from old-growth forests.

Contractors are finding that incorporating salvaged wood and other building materials into the homes they construct is actually a good business move; many environmentally conscious prospective homeowners who decide to build rather than buy a home look for help from professionals willing to consider working recycled materials into their plans.

With awareness about environmental concerns and possible solutions rising among the public, the use of building materials recycled from demolished structures will continue to be an accepted, and possibly preferred, practice for a long time into the future.

Aldene Fredenburg is a freelance writer living in southwestern New Hampshire. She has written numerous articles for local and regional newspapers and for a number of Internet websites, including Tips and Topics. She expresses her opinions periodically on her blog, http://beyondagendas.blogspot.com

How To Market To Construction Industry

The dreadful events like Hurricane Katrina, Hurricane Rita and Tsunami have eaten a large number of buildings and dwellings. Due to this, there are chances of gigantic growth in the construction industry. It is expected that the industry will grow to $1.1 trillion in 2006 and $1.2 trillion in 2007.

Moreover, within this, the growth opportunities are great in the segments like residential, retail, office, hospitals and schools. Builders are looking for people who are responsible, sincere, punctual and trustworthy and can supply them efficient and quality products and services.

Therefore, you area a contractor or material supplier or technology vendor, take advantage of the situation. Make money out of this simply imbalance equation of demand and supply.

How Can You Do This? If you want to reach these builders or other executives operating in the construction industry, you can use traditional methods like trade shows, local sales forces and brochures. Along with these, websites also deliver promising and profitable results.

Some marketers have tried and found customer relationship management a better and advanced technique to reach their customers and provide them customized products.

A well designed and well developed website also raises the chances of getting contract. If the website contains all the product information, price list, delivery mode and useful tips, it is considered as an advantage. Online marketing, thus, can play an important role in getting profitable contracts.

Advertisement, in its traditional way, always proves to be helpful. It can be done both on regional and national levels. Like all other advertisers, you also need to use various advertising strategies like recalling and persuading, but in your own way.

You also need to be different in your approach. If you want your customers to come back, you have to provide some special services like warranty for used products. You can also guarantee a particular price for fixed period. You can win a larger market share by providing cost-effective and time saving products.

Remember, once you get a good contract, you work for it whole-heartedly and sincerely; you can easily create a loyal customer base for your business. Builders demand a good package including availability of materials, on-time delivery and strong pricing commitments. Moreover, you have to offer them to be in their contractors’ list. Your low pricing offers should not make them feel that the quality of product and services is also low.

If you are confused and do not know where to start with, you can take help of marketing advisers and various websites. Their valuable tips can help you customize your marketing programs for the construction industry.

Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.

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FHA Section 221 Is The Best Apartment - Multifamily Construction Loan Program Available

FHA Section 221 is the best loan program in the marketplace today. Multifamily Developers are often amazed at the benefits this program offers them.

What Is This Program?

FHA Section 221 is a Federal mortgage insured program. It doesn’t mean that the government is funding the loan…they are insuring it against default. Section 221(d) is a section under the Federal National Housing Act. It allows the FHA (Federal Housing Administration) to provide mortgage insurance to HUD approved lenders. This is to assist in the development or substantial rehabilitation of apartment or other types of multifamily rental properties. The loan program allows for long-term mortgages (up to 40 years) that can be financed with Government National Mortgage Association (GNMA) Mortgage Backed Securities.

Who Can Use The FHA Section 221 Apartment Construction Loan Program?

This program is available for both non-profit and for-profit borrowers. Under Section 221(d)(3), non-profit borrowers can receive an insured mortgage up to 100% of the estimated replacement cost of the project. Under Section 221 (d)(4), for-profit borrowers can receive a maximum mortgage of 90% the replacement cost estimate.

Eligible Property Types?

Most people mistakenly believe that this program is only for low income tenants…there are NO income limits. The properties can be market rate, LIHTC (low income housing tax credits), and bond properties. The properties can also be specifically used for senior or handicap tenants.

The property has to have at least 5 units and it can either be detached, semidetached, row, walkup, or elevator style. Non-apartment property types are also eligible for this program. Such as mobile home parks and assisted living facilities. The properties can also have limited commercial/retail space.

What Are The Benefits?

There are so many good benefits of using this program:

• Term/Amortization - It is a 40 Year Amortization/40 Year Term (with no balloon).
• Interest Rate - A low, fixed interest rate, based on market spreads over the Ten-Year Treasury Yield. The interest-only construction loan automatically converts to 40-year permanent loan. Both construction and permanent rate are fixed prior to the start of construction.
• Loan To Cost - It is based on total replacement costs (including land) and it is 90% maximum (for-profits) and 100% maximum (non-profits).
• Personal Liability - It is non-recourse for both the construction and permanent loans.
• Equity Requirement - A Developer’s Fee of 10% of cost can be allowed to be used towards equity requirements.
• Debt Coverage Service Ratio - A minimum 1.10 DSCR.
• Loan Amounts - There are no maximum loan amounts and minimum loan amounts vary by lender.
• Occupancy Requirements - There are no occupancy requirements.

What Are The Downsides To This Program?

 

 

 

• Loan Processing Time - With HUD approved MAP (Multifamily Accelerated Processing) lenders, the process can take 3 to 6 months. Non-MAP lenders can take 6 to 9 months.
• General Contractor Requirements (GC) - GC’s must conform with prevailing wage standards under the Davis-Bacon Act and have a project completion bond.
• Prepayment Penalties - The prepayment terms are negotiable but they are usually a 5 year lock-out period then a declining prepay schedule after (5%, 4%, 3%, etc…).

As you can see the benefits of this program significantly outweigh the negatives. Developers can take advantage of this attractive financing and allow them to do larger projects.

Visit http://www.all-about-commercial-mortgages.com to learn more about commercial properties and financing of commercial properties. Educate yourself before buying that commercial property!

Patti Porter is a Commercial Mortgage Broker specializing in income producing properties and Commercial Finance Training.

Construction Jobs in Florida

Working in the construction industry can be very rewarding. It can also be difficult. Let us give you a hand and you’ll be earning the big bucks in no time. Construction Jobs in Florida are available and getting to work can be easier than you think. Your quality employment is just right around the corner.

Whether you are new to construction or an old pro, getting a construction job in Florida does take some effort. You’ll want to be sure and have a good construction resume available when you apply for jobs. This will ensure that you can get a position promptly, by proving to your future employers that you are focused and ready to give it your all.

Once you give it a try, you might consider a construction career. Those individuals who choose careers in the construction field can be very successful. With the abundance of construction jobs in Florida, you could have a fabulous career ahead of you. Your dream life on the beach in Florida could be a reality in no time.

With your experience with resumes, and your time spent in the construction industry, you just might be interested in starting a construction company of your own. Construction companies in Florida can be very profitable. Those with experience in the field can do very well for themselves with a company of their own. Before you know it, you’ll be creating even more construction jobs in Florida for other hard workers just like yourself!

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