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Contracting for Personal Residences

Monday, 12 May 2014 20:50

Like many other businesses, contractors and construction consultants require financing for projects, including bank loans and Title I loans.

Starting a company works roughly the same in many industries – an individual comes up with a concept, creates a business structure, and secures capital. In line with this process, contractors and consultants in the construction industry starting or developing a company are required to follow similar steps: establishing a business model, hiring employees, securing office or business space, and arranging for a commercial business loan. However, if you are interested in contracting for personal residences, don't rush off to the bank for a loan just yet. The financing options in contracting, most notably in contracting for personal residences are not necessarily the same as in other industries.

Title I Loans

Contractors and others in the construction industry may find themselves faced with an extraordinary need for capital. After all, money is needed to finance a project before the job is finished and the payments for labor and materials are paid in full. Title I loans are loans intended to finance home repair and refurbishment projects and are available to contractors.

Securing Capital With a Title I Loan

A Title I Loan is different than a standard bank loan. Offered through the U.S. Department of Housing and Urban Development (HUD) for personal property improvements, Title I loans are fixed rate loans available to homeowners as well as contractors working on home repairs or property development with interest charged at a current market rate. With a modest limit for family homes, Title I loans are a great way for contractors to obtain the capital required to begin a project.

Underwriting and Collateral

Underwriting for Title I loans includes examining a company’s debt-to-income ratio, anticipated housing expenses, and regular fixed expenses. Like other forms of home loans, Title I loans are secured by property and are repaid at a fixed rate, making them a convenient and safe option for borrowers.

For contractors specializing in personal residences and other HUD-code property, Title I loans can be a great way to finance a project. With clear underwriting considerations and sensible collateral, Title I loans provide low-risk financing for homeowners and contractors alike.


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