What if I change my budget after the appraisal is done but before closing?

2019-07-24T20:39:56-04:00Construction Loans|

First and foremost you want to inform your lender that you have made a change.  The budget is the lenders blueprint and payout schedule/template during the construction phase.  Not only is the loan paid out as a whole, but also as individual line items i.e. lumber, electrical, and cabinets etc. Changes, even small changes, to

What if my appraisal comes in low?

2019-07-24T20:40:32-04:00Construction Loans|

If the value comes in lower than expected, there are a few remedies to either increase the appraised value or reduce the cash to close needed. Appraised Value So what happens if you don't like the result of the appraiser's value?  There are two options if you don't like the appraiser's opinion of value: Dispute

What needs to be included in a construction contract?

2019-07-24T20:40:40-04:00Construction Loans|

The purpose of this topic is not to give legal advice of what should be in or how a construction contraction should be structured, but instead provide the general info a bank may require in the contract and items that are generally recommended to be in a construction contract. Building a home can be both

What type of insurance is needed?

2019-07-24T20:41:15-04:00Construction Loans|

You will be required to provide the lender with homeowner’s insurance that covers the construction of your home.  That may be in the form of a so-called “builder's risk policy” or it may be a standard homeowner’s policy with additional coverage for construction. If your project is a new build, it’s more likely you would

What’s needed to order the appraisal?

2019-07-24T20:41:31-04:00Construction Loans|

There could be two or three items needed before an appraisal can be ordered.  What’s needed will depend on the project.  Generally speaking the three items would be: Plans Budget Specifications Plans The types of plans needed will depend on the project you are doing.  In some cases, plans will not be needed. New construction:

Will I have to provide you will updated income and asset documentation?

2019-07-24T20:41:39-04:00Construction Loans|

Maybe.  It will ultimately depend on how long it takes for you to close on your loan. Income and asset items like pay stubs and bank statements get stale after 120 days. While that is certainly enough time to get your loan approved, delays in the planning and budgeting of the project can delay the

Will you re-pull credit after application?

2019-07-24T20:41:50-04:00Construction Loans|

Yes, sort of.  The mortgage world does a “soft pull” on all loans prior to closing.  A soft pull checks to see if any new credit has occurred after application or if existing credit increased like credit card balances or payments.  So it is very important to NOT inquire for new credit or run up

I have my own business, is that a problem?

2019-07-24T20:42:06-04:00Construction Loans|

No.  It has no impact on the loan itself.  It will impact how much income documentation may be needed. Because lenders are required to fully document a file, complete personal and business tax returns with profit and loss statements as well as additional items may be needed depending on how you file your tax returns.

If I pay cash for the property, can I pull equity funds back out?

2019-07-24T20:42:14-04:00Construction Loans|

For timing purposes, occasionally people will purchase a property with cash that they will be tearing down and rebuilding or remodeling. In most cases the situation dictates they close quickly and have no time to finance the purchase. In cases like this, a client can possibly pull some of that equity back out with proof

Is the interest rate fixed during construction?

2019-07-24T20:42:23-04:00Construction Loans|

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

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