Evaluating construction loans (using actual numbers)
From: Odysseus Levy (olevycosmosgame.com)
Date: Mon, 10 Apr 2000 00:23:35 -0600 (MDT)
I'm working on the finance team for Seattle cohousing
(www.seattlecohousing.org).

We are getting close to breaking ground on July 1st, but first we need to
settle on a construction loan.  The best offer that we have been able to
find is this:

* Fixed 9% with a maximum 2 year term
* 1.25% points
* 23% down payment required

Our financial consultant tells us that this is a great deal, but we are
finding it a bit challenging to come up with the full 23% down payment (we
currently are at 15%).

Our consultant warns us that even if we did manage to find a bank that would
let us put down a smaller down-payment, the terms would be much worse.  A
different loan would probably have a higher interest rate and would float
with the market.  Also the points would probably be somewhere between 1.5%
and 2%.

I'm curious to know what numbers other groups have been working with. Have
other groups gotten deals better or worse than this?  I'm particularily
interested to know the percentage down payment other groups have had to come
up with.

Thanks!

Odysseus Levy
Seattle, Washington


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