Construction Loan Extensions
One of the most common problems a Residential Construction Loan project runs into is running out of time on the actual Construction loan.
Many Construction Loan terms average around 9 months. However a borrower may elect to choose an upfront Construction Term of 3 months, 6 months, 9 months, 12 months, 15 months, 18 months or 24 months.
It is always best to over estimate the time it will take you to build your home so you are not hit with an expensive extension fee.
Extension fees can range anywhere from .125% per month to .25% per month. That can add up very quickly.
The best way to extend your loan is to over estimate by 3 months or so over what your builder thinks he can complete it by. If you still go over and need more time you will need to contact your Lender and submit an extension form. The lender will always grant this as they have no choice and are anxious for you to finish your home so that their collateral is complete. However you will be hit with fees and they can be expensive.
When in doubt, over estimate!