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
Yes. Be sure to communicate as soon a possible the name and contact information of your builder. It is best to connect the builder and the lender early on in the process so the builder has all the information he or she will need for requirements prior to closing and the process of draws after
In a word, time. Timing is the most stressful part of buying a home and closing on a construction loan at the same time? Because a construction is based on the completed project, an appraisal needs to be done based on the project. That means you need to have a completed set of plans and
Do: Stay in your home Pay your bills, especially your mortgage, on time Use your Credit Cards as normal, keep balances low Stay employed Don’t Start projects on home prior to approval Apply for any new credit – loans or credit cards Make a major purchase Consolidate credit cards Move money between banks accounts Take
Everyone’s timeline will be different. Putting the appraisal aside, it generally will take a week or two to get the loan approved. The approval of the loan will work concurrently with the appraisal process. The single biggest item that impacts how long it takes to close on your construction loan is when adequate plans and
