Yes. The rate is locked in prior to closing and fixed during the construction period. A typical construction period is 12-18 months. Our construction loan products are ARM products fixed for a period, and amortized over 30 years. Once construction is complete, the rate will continue to be locked at the same rate. Depending on
You may want to consider putting down a lesser amount for your down payment thus maximizing the loan amount you are able to obtain based on your specific scenario. This may be helpful later on during your project in the case of cost increases during construction. Often times there are cost overages to your budget
It’s best not to. One of the items underwriters are hyper-sensitive to are “large deposits”. A large deposit is generally defined as a non-employment direct deposit that is 25% or more of your gross monthly income. If you sold your car and deposited the check into your bank account, it would show up as simply
Maybe. If you already own the property you will be doing construction on, you and your builder have the option to select the title company. In many cases the builder has a favorite title company they like to work with and have a working relationship with. They may also have multiple projects with that one
No. A permit is not required to close the loan. A permit will be required at the first draw after closing. With that said, you certainly want to make sure that you don’t anticipate any issues in obtaining the permit prior to closing. Any sort of delay in obtaining the permit will delay the first
A detailed line by line budget is needed for both the appraiser and for the purpose of paying out on the construction loan during construction phase. A key element to a construction loan is that it is paid out on individual line items (i.e. plumbing or lumber) rather than a total balance overall. For example,
There is only one appraisal done for a construction loan and that is based on the proposed and completed project. The appraiser will use the plans, budget, and specs to determine what the finished home will be like. It’s important to provide the appraiser accurate plans and detailed specs to give the appraiser a clear
It’s ideal for all parties to be at closing that need to sign. However, at times it’s just not possible. In cases where you will not be able to be at closing, you can have someone sign on your behalf by using a Power of Attorney (POA) form. You will want to make sure the
Mortgage lenders and banks today are required to fully document a file and prove they have determined the borrower has the “ability to replay” the loan. Because of this, there is more (a lot more at times) documentation that is needed for full approval. The items are considerably more when a borrower is self-employed or
Do I need plans and a budget for a construction loan? Yes. The appraisal on a construction loan is completed based on the plans, budget, specs and details provided to the appraiser. The more details you provide to the appraiser, the better chance for a favorable outcome. Essentially you want to give the appraiser enough
Can I refinance right after construction? Yes! Since the construction loans are ARM products, many clients will refinance shortly after construction is complete to a traditional 30 year fixed rate. Although the construction loan is for a 30 year term, the rate is not fixed for 30 years. Rate options are fixed for three, five,
Can I purchase and close on my new property at the same time as the construction loan? The answer is yes. However, depending on how much time you have, there can be some variables and time constraints. When you enter into a contract to buy a home or property, you have a contractual closing date.
