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
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
For the most part a construction loan closing is very similar to a non-construction loan closing. If you are closing the loan at the same time you are purchasing the property, you’ll do all the same stuff you would if you weren’t doing a construction loan. If you already own the property, the closing would
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.
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
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
