As housing recovers, local banks more forthcoming with construction financing

New York /
Nov.November 02, 2012 12:30 PM

Getting a loan for new residential construction is getting easier.  According to the New York Times, regional banks and credit unions have begun to offer more construction financing as the housing market improves.

Because regional banks know their local markets, they are more comfortable lending to local housing projects in prime areas, but qualifying remains difficult. 

“People want to make sure they know what they need to do early in the process,” Penn Johnson, the president of the Stamford Mortgage Company, told the Times. “You can’t apply until after you have building plans, a construction contract and a cost estimate.”

Down payments are usually figured at 20 to 30 percent of the total cost of the project, according to Mark Yecies, an owner of SunQuest Funding in Cranford, N.J.

Increasingly borrowers of construction loans are refinancing into a 30-year loan, with a single closing, called construction-to-permanent financing. However, despite their growing popularity, interest rates are usually higher.

“You might be paying an extra quarter to a half a percent above Fannie Mae” Johnson said, comparing that with “a 30-year fixed in the low 4 percent, and a 5-to-1 adjustable-rate mortgage at 3 percent.” [NYT]Christopher Cameron

 
 

Related Articles

arrow_forward_ios
Slowdown in pending homes sales signals “turning point” for housing market
Slowdown in pending homes sales signals “turning point” for housing market
Slowdown in pending homes sales signals “turning point” for housing market
CBRE's Emma Giamartino and Bob Sulentic (CBRE, iStock)
Flush with cash, CBRE is ready to spend
Flush with cash, CBRE is ready to spend
GCP CEO Alan Yang (Getty, GCP)
GLP raises $2.3B for logistics property fund
GLP raises $2.3B for logistics property fund
Realogy CEO Ryan Schneider (iStock)
Realogy CEO: remote work is here to stay, but home price growth is real
Realogy CEO: remote work is here to stay, but home price growth is real
Alphabet CEO Sundar Pichai and Twitter CEO Jack Dorsey (Getty)
Twitter, Google latest big companies to delay office returns
Twitter, Google latest big companies to delay office returns
Durst Organization CEO Douglas Durst (Getty)
Durst to fire unvaccinated corporate employees Sept. 6
Durst to fire unvaccinated corporate employees Sept. 6
Converting offices to lab spaces comes with challenges, as some spaces need specific ventilation and upgraded electrical facilities (Getty)
Conversions from offices to life science labs booming
Conversions from offices to life science labs booming
132 West 14th Street and KPG’s co-founders Rod Kritsberg and Gregory Kraut (Avison Young, KPG)
KPG signs long-term ground lease for 57K sf at 132 West 14th Street
KPG signs long-term ground lease for 57K sf at 132 West 14th Street
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...