How Long Can You Finance A Metal Building?

Understanding Metal Building Financing

Financing a metal building can be a unique process compared to traditional construction financing. Many lenders may not have extensive experience with metal buildings, which can create challenges in securing appropriate financing.

It’s essential to find lenders who understand the benefits and characteristics of metal buildings, as they will be better equipped to provide suitable financing options.

One of the key factors that lenders consider when evaluating metal building financing is the intended use of the structure. Residential, commercial, and agricultural metal buildings may have different financing requirements and options available.

Additionally, lenders will assess the project’s size, complexity, and overall cost to determine the appropriate loan amount and terms.

Home Improvement Loans for Metal Buildings

For smaller metal building projects, such as garages, workshops, or outbuildings, home improvement loans can be an excellent financing option.

These unsecured personal loans typically range from $1,000 to $50,000, with repayment terms ranging from 2 to 12 years and annual percentage rates (APRs) between 4% and 20%.

Home improvement loans are often easier to obtain than other financing options, as they do not require collateral or extensive documentation. However, it’s crucial to research costs thoroughly, including design alternates, variations, and contingencies, to ensure that the loan amount adequately covers the entire project.

Construction Loans for Metal Buildings

If you’re planning to build a metal residential, retail, or commercial building, construction loans may be the way to go. These loans are specifically designed for financing the construction process and typically range from $5,000 to $50,000, with terms of 2 to 5 years and APRs between 5% and 30%.

Construction loans are typically short-term, high-interest loans that cover the costs of land, materials, and construction.

To obtain a construction loan, you’ll need to provide detailed budgets, plans, and schedules, as lenders want to ensure that the project can be completed within the loan term.

Construction-to-Permanent Loans for Metal Buildings

Construction-to-permanent loans, also known as single-close loans or one-time close (OTC) loans, are a convenient option that combines the construction loan and permanent mortgage into a single loan. This eliminates the need for two separate loans, simplifying the financing process.

With a construction-to-permanent loan, you’ll initially draw funds from a construction loan to finance the building process.

Once the project is complete, the loan automatically converts to a permanent mortgage, which you’ll repay over a longer term, typically 15 to 30 years.

Home Equity Loans and Lines of Credit for Metal Buildings

For homeowners with sufficient equity in their homes, home equity loans or home equity lines of credit (HELOCs) can provide financing for metal building projects. These options allow you to borrow against the equity you’ve built up in your home, using your property as collateral.

Home equity loans provide a lump sum of cash that you’ll repay over a fixed term, typically ranging from 5 to 30 years. HELOCs, on the other hand, offer flexible access to funds and competitive rates but are tied to the equity in your home, which means defaulting on payments could put your home at risk.

Agricultural and Rural Property Financing for Metal Buildings

If you’re planning to build a metal building on a farm or rural property over five acres, specialized agricultural and rural property financing options may be available.

Lenders familiar with the agricultural industry often have a better understanding of metal building requirements and can offer tailored financing solutions.

Agricultural loans can be used for a variety of purposes, including financing metal barns, silos, equipment storage buildings, and even metal homes on rural properties.

These loans may offer longer repayment terms, lower interest rates, and more flexible qualification requirements compared to traditional loans.

Lenders Specializing in Metal Building Financing

While finding lenders experienced in metal building financing can be challenging, some institutions have emerged as leaders in this area.

One such lender is New Century Bank, which specializes in construction and permanent mortgages for metal buildings, including garages, workshops, barns, homes, and commercial and retail buildings.

New Century Bank offers several features that make it an attractive option for metal building financing:

• Conventional lending rates
• Fixed-rate financing with 30-year amortizations
• Low down payment options, with the potential to use the equity in your land as a down payment
• Short-term loans to buy land and build, with the debt included in the construction mortgage
• Second mortgages and home equity lines of credit up to 90% of the appraised value
• Loan coverage for all expenses related to the construction process
• Commercial and lease finance options

By working with lenders that specialize in metal building financing, you can increase your chances of securing favorable terms and a smooth financing process.

Loan Term Considerations for Metal Buildings

The loan term you can secure for your metal building project will depend on several factors, including the loan type, the lender’s policies, and your creditworthiness.

Generally, home improvement loans and construction loans have shorter repayment terms, ranging from 2 to 12 years, while mortgages and agricultural loans may offer longer terms of up to 30 years.

When considering loan terms, it’s essential to balance your budget and long-term financial goals. Shorter loan terms may result in higher monthly payments but lower overall interest costs, while longer terms can provide more manageable monthly payments but higher total interest paid over the life of the loan.

Additionally, some lenders may offer fixed or variable interest rates for metal building financing. Fixed-rate loans provide predictable monthly payments, while variable-rate loans may initially have lower interest rates but can fluctuate over time, potentially increasing or decreasing your monthly payments.

Preparing for Metal Building Financing

To increase your chances of securing favorable financing for your metal building project, it’s crucial to prepare thoroughly. Here are some key steps to take:

1. Research and Build a List of Lenders: Start by researching lenders with experience in metal building financing. Look for those who have financed similar projects and understand the unique requirements of these structures.

2. Gather Detailed Cost Estimates: Thoroughly research and document all costs associated with your project, including the building kit, site preparation, installation, and any additional expenses. Obtaining multiple quotes can help you get a more accurate estimate.

3. Prepare Engineering Drawings and Floor Plans: Lenders will want to see detailed engineering drawings and floor plans to better understand the scope and complexity of your project.

4. Evaluate Your Financial Situation: Lenders will assess your creditworthiness, income, and debt-to-income ratio to determine your eligibility for financing. Be prepared to provide documentation such as tax returns, pay stubs, and bank statements.

5. Consider Your Down Payment: Many lenders require a down payment for metal building financing, typically ranging from 10% to 20% of the total project cost. Explore options for using the equity in your land or other assets as a down payment.

By following these steps and presenting a well-prepared and comprehensive financing package, you’ll demonstrate to lenders that your metal building project is a sound investment, increasing your chances of securing favorable financing terms.

Conclusion

Financing a metal building can be a complex process, but understanding the available options and finding the right lender can make a significant difference.

Whether you’re looking for a short-term home improvement loan, a construction loan, a construction-to-permanent loan, or specialized agricultural financing, there are solutions available.

By carefully researching and comparing lenders, providing detailed plans and budgets, and demonstrating the value of your metal building project, you can increase your chances of securing favorable financing terms and repayment periods that suit your needs.

Remember, the key to successful metal building financing lies in thorough preparation, understanding your options, and working with lenders who specialize in this unique area of construction financing.