Yes you can, but it can complicate things if not done correctly. At times clients will want to start their project before the loan has closed. Items to consider are: Permits: Permits are not required to close but are required at the first draw. Be very sure those are available by that time otherwise there will
The construction phase is the period of time your home is under construction. Once your home is complete, the loan moves to the permanent phase with payments of principal and interest. Every construction phase is initially setup for 12 months. If you use less time, the loan will move to the permanent phase once your
Our goal in our draw process is to allow your builder to spend as little time as possible with paperwork so you can concentrate on completing a great project. At the same time the bank needs to balance the risk of being overdrawn on a project that may run out of funds before it’s complete.
It is possible, but the process to switch builders after you close (and before completion) can be quite time consuming. The most common reasons homeowners want to switch is due to disagreements on costs and excessive delays. When a homeowner wants to change builders, both the lender and the title company will have certain requirements.
No. The purpose of the inspection is to confirm whether work that is being requested to be paid out has been completed. It is important that you understand the specifications of your construction contract and monitor the work is complete to your standards. The inspection report that is completed by inspector is to confirm the
You can, but it is not recommended. Remember, the construction loan is a regular mortgage. When you pay down a regular mortgage, you can’t draw funds back out without refinancing the loan. The construction loan works the same way. If you have, say, a $300,000 construction budget and decide to pay it down during the
Yes. At times it may be necessary to pay for a construction item prior to the funds being drawn from the loan. This may be necessary due to timing or a deposit the builders wants, but the lender will not allowed to be paid out. Whatever the reason, as long as the costs are documented
A Mechanic’s lien is a lien that may be filed against the title to your property by a contractor, subcontractor or material supplier who has not received full payment for work or material provided to the property. If the Lender is notified of the filing of a mechanics lien on your house, the Lender will
One of the most important aspects of a construction project is developing and maintaining a solid budget. The loan is approved and the appraisal is done based on the budget that is provided by the client during the loan process. Once the loan closes, the bank will payout on the project based on that same budget.
The purpose of an inspection is to ensure the items that the builder is requesting to be paid out have been complete and that the percentage of funds of the overall project that has been paid out is consistent with the percentage that the project is complete. For example, if the inspector’s report indicates the
The only change in the loan after your home is complete is the payment. During construction it is interest only based on balance owed and after construction it changes to principal and interest. The actual P&I payment will be determined by the final balance of the construction loan and the remaining term of the loan.
Line shifting is when you pull money from a budgeted item that hasn’t been paid out yet to cover an overage of a current item. For example, let’s say the cabinets came in $5,000 more than was budgeted. Instead of covering the increased cost of the cabinets to stay in balance, builders make take the
