Late summer of 2024, total construction starts were up 6%, and residential projects saw an impressive 8% increase year-to-date. With this growing momentum, brokers like you have a unique opportunity to support developers and builders as they secure financing for their projects. By connecting experienced builders with LendSure’s Ground-Up Construction loan program, you can position yourself as an indispensable partner in the construction process.
Ahead, you’ll explore how the construction loan process works, key considerations to keep in mind, and what makes LendSure’s solutions stand out in today’s market.
The Basics of the Construction Loan Process
Unlike traditional mortgages, construction loans are disbursed in stages based on project milestones, such as foundation completion, framing, or wiring. This phased structure ensures that funds are only released as verified progress is made, providing added financial security for lenders.
When the project is complete, the loan can often be converted into a long-term mortgage through construction-to-permanent financing. Alternatively, your clients may choose a standalone construction loan, requiring them to secure permanent financing separately.
With flexible solutions like LendSure’s Ground-Up Construction loan, you can streamline this process, helping your clients move forward confidently.
The Construction Loan Process in Six Simple Steps
Understanding each stage of the construction loan process is key for you to provide valuable guidance to your clients. Here’s a step-by-step breakdown:
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Find the Right Loan Option
Every borrower has unique goals and challenges. Some may prefer construction-to-permanent loans for simplicity, while others might choose standalone loans if they’re confident in securing future financing.
For builders constructing SPEC homes or rental properties, LendSure’s Ground-Up Construction program offers financing designed to meet those needs, helping you serve a broader range of clients.
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Prequalification
Once the right loan option is selected, prequalification comes next. You’ll evaluate your client’s eligibility. Based on LendSure’s criteria, your client would need a credit score of at least 680 and construction experience, like completing three new builds or two builds and a $200,000+ renovation.
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Project Documentation
Detailed project documentation, such as cost projections, blueprints, and permits, is essential to the loan approval process. You can support your clients by explaining lender requirements and ensuring everything is in order.
LendSure’s flexible approach, lending on both lot and construction cost, ensures your clients can proceed confidently once plans and permits are approved.
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Flexible Loan Terms
Loan terms have a big impact on your client’s overall experience. LendSure gives you a competitive edge by offering 12- and 18-month interest-only terms, plus delayed payments. Borrowers can stack the first four months of interest payments into their loan, delaying their first payment by up to five months. By highlighting these features, you can show your clients how flexible options can ease cash flow concerns.
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Inspection and Draw Stages
Once construction begins, funds are disbursed through a draw process linked to completion milestones, with inspections ensuring quality work. LendSure reimburses up to 65% of the lot purchase price and releases future funds as verified construction phases are completed. This reliable structure helps you reassure your clients and build trust.
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Transition to Long-Term Plans
The final stage of the construction loan process involves transitioning to completion. Whether your client rolls their loan into a long-term mortgage or refinances, LendSure’s quick closing timelines (typically 25-45 days) and competitive pricing make it easier for you to guide this part of the process to a successful conclusion.
Key Considerations for Brokers During the Construction Loan Process
- Manage Timelines for Permits and Inspections: Construction loans often require permits or inspections at various stages, which can create delays if not planned well. Help your clients account for these factors in their timelines.
- Use Cross-Collateralization: For clients with limited upfront assets, cross-collateralization—using multiple properties to secure the loan—can strengthen their application. LendSure allows you to offer this added flexibility.
- Build Relationships with Reliable Contractors: The success of a construction loan often depends on the contractor’s reputation and performance. Help your clients identify qualified professionals with General Contractor (GC) licenses (LendSure’s program requires contractors to hold a GC license).
Partnering with LendSure for Ground-Up Construction Loans
Your ability to guide borrowers through the construction loan process is what gives you an edge in a crowded market. With LendSure’s Ground-Up Construction loans, no income documentation is needed to qualify, and you can provide your clients with competitive rates and flexible terms. As projects progress from construction to completion, our financing transitions into long-term solutions for end buyers, helping you drive ongoing business growth.
LendSure’s programs offer quick and straightforward prequalification, often within 24 hours, allowing you and your clients to move forward with confidence.
The LendSure Way
It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers, ratios, and data to consider, but we know that behind every file, there’s an individual with a unique circumstance seeking a loan. We work hard to offer our common-sense take on lending to borrowers seeking funding for the home of their dreams, another addition to their investment property portfolio, or refinancing of a currently-owned property.
Are you ready to benefit from a common-sense approach to lending? Contact us today to learn more about Non-QM loans and how partnering with LendSure Mortgage Corp. can help grow your bottom line.
