Construction Interest

One of the benefits of utilizing a HUD 221(d)4 loan is the ability to capitalize construction interest in the mortgage amount. This structure is better than an interest only structure since the amortization does not start until occupancy and revenue starts coming in. With standard bank construction financing, construction interest is amortized which results in negative arbitrage and high interest payments during the construction period.

Leave a Reply

Your email address will not be published. Required fields are marked *