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Getting a Church Mortgage Loan for New Construction    

  • April 29, 2020

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church mortgage loan

When you need to construct any building for expansion of your ministry, a church mortgage loan is an excellent option. The process of taking a loan, however, involves several steps.

From arranging the finances to finding the best lender, you need to be cautious at every step of the way. It will help if you understand what does a streamlined loan process looks like. Here, it is.

Understand Your Financial Requirements

Before applying for a mortgage loan, you have to consider if you genuinely need finance for a new construction project. It always makes more financial sense to assess and optimize the existing space before adding new facilities. Sometimes, you may have underused areas that may be renovated to fulfill additional requirements.

Related: How To Avoid Getting Rejected For A Mortgage

But, if they do not, you can apply for the best type of construction loan suitable for your church's needs. Even when you decide to take a loan, use your existing sources of funds to cover the cost of construction to the maximum. It will help to reduce the amount you need to borrow from the lender.

Know If You Qualify for the Loan

When assessing the qualification of your church for a mortgage loan, remember the fact that this loan is different from a home loan. Many church members having personal experience of home loans apply the same knowledge to obtain a church loan as well. That's not the right approach.

You need to understand that church property comes under a specific category of commercial real estate. Hence, the rules of qualifying for the loan also differ. You need to describe your ministry, estimated property value, current debts if any, and your financial standing to the lender. With this information, they determine if you can qualify for the type of loan you need.

Typically, construction loans for churches are available for financing a new building on existing land, land acquisition and building, buying a property with a building, or funding a construction project in progress.

Know Your Lender Options

Once you understand your financial needs and qualifications for a church mortgage loan, it's time to find the right lender. Many factors matter in the process of choosing the best lending partner. Do your research wisely and select a company that understands the vision of your ministry and offers the relevant types of loans.

A loan is a significant financial decision for your church. Hence, work with a lender that makes you comfortable and provides complete support to finance the growth of your ministry. With the right research, you may find a lender financing up to 100% of the project costs without any personal guarantees or audited financial statements.

Prepare the Documents

For a smooth lending process, you may have to provide several essential documents to the lender. They include up-to-date bank statements, market appraisal of your current property, title search, property survey, copy of bylaws, copy of the current constitution, and corporate resolution with authorized signatures.

Once you complete all these steps, apply for the application, and submit the same to the lender for approval. The process can range from a few weeks to months for processing the loan, depending on your proposal.