What Does it Mean to be “Out of Balance” on a Construction Loan?

Shared by Ed Currie of Associated Bank

Being out of balance means you don’t have enough funds remaining in the loan based on the costs needed to complete the project.  This generally occurs when the costs of the project have increased from the original budget.
For lenders it is important that there are sufficient funds available in the loan to complete the project in case the homeowner does not complete the project.  This way the lender can use the funds set aside to complete.  Lenders never want to take back a home much less an incomplete home.
When a loan becomes out of balance, it needs to be remedied to get back in balance.  Typical remedies include having the homeowner bring in cash or have the builder reduce his or her fee to make up for the cost increase.
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Ed Currie Associated Bank

Ed Currie

Associated Bank

Meet the Author ...

Ed Currie

Ed Currie began assisting clients with mortgage financing in 1994 during one of the slowest mortgage markets in the last 25 years. The slow market allowed Ed to develop his client-centric philosophy and drive to make the process as stress-free as possible. Since that time, Ed has assisted over 5000 clients with total loan production exceeding $1 Billion.

NAIHBR Opens East Coast Office in Washington DC

NAIHBR continues to grow. We are proud to announce the expansion of the NAIHBR organization to the North Virginia and Washington DC area with our east coast chapter located at 1300 I Street NW Suite 400E, Washington DC, 20005. NAIHBR has partnered with key sponsors like EverBank and National Mortgage Insurance (MNI) to organize a Leadership Summit that will be held at the North Virginia Association of Realtors headquarters in Fairfax Virginia on July 26th, 2018.

Key topics for the event include…

  • Local Market Overview by Industry Experts
  • Financing options for new construction and renovation, that Pay Commissions Upfront
  • High-tech solutions to connect Realtors to today’s buyers and sellers
  • Launching of the 3/2 Program that triples commissions and doubles marketing opportunities by bringing the real estate and construction communities together to sell more new homes and help builders secure construction projects.
  • Introduction of the Homebuyer Benefit Program, which gives NAIHBR Preferred Members up to $550.00 of valuable home improvement credits and services to provide to as many of their buyers and sellers as they wish – unlimited use!
This event is sure to be a full house, so interested attendees can reference this EventBrite link to register and reserve their seats:
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We are excited to expand NAIHBR to yet another market, and hope to see you in Fairfax!
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