Construction Financing

Congratulations on taking one of the most important steps of building your home, finding the right lender. We look forward to helping you fulfill your dream and making the loan process easier.

Items Needed at Application:

The following is a list of items needed at application for rapid and proper processing of your loan.

1. Completed and signed loan application.
2. One month of most current paystubs from all current employers.
3. 2 years of most recent W-2’s for all employers.
4. Self Employed Borrowers – must furnish 2 years worth of complete tax returns, (1099’s K-1, etc.)
5. Most recent 3 months bank statements (all accounts).
6. Additional income verification(s) i.e. Social Security award letter, retirement, child support, etc.
7. Sales agreement on land, or copy of deed with legal description.
8. Survey or plat plan if available.
9. Complete set of plans, specifications and fully executed builder’s contract, plus a record of deposits given to contractor.
10. Proof of Insurance – Builders Coverage

Items 1- 6 must be submitted to obtain pre-approval of permanent financing. All items must be submitted to be approved for construction financing. Construction financing is subject to pre-approval of permanent financing.

The Application Process

Upon receipt of all items listed above the process begins. At this time you are given initial disclosures based on the estimated terms and conditions selected by you with the assistance of your loan officer. Your credit and application are underwritten for pre-approval of your permanent financing. The plans and specifications are sent to an appraiser for property valuation. Upon credit approval and satisfaction of any additional requirements, your loan is forwarded for closing.

Locking Your Rate

It is crucial to understand both the benefits and the process of locking in your interest rate. Since the construction process can take anywhere from 4 months to one year, the interest rate for your permanent financing is subject to change over time based on market conditions. Your construction loan rate is determined at application approval and is fixed for the length of the construction term. Interest only payments are made monthly based on the existing loan balance. During construction your rate for permanent financing will be floating and cannot be locked until the appraiser/inspector has confirmed that the home is within 30 days of completion. At that time you may contact the Real Estate Loan department to determine the rate available and lock-in your rate.

Disbursement Schedule

Flexible disbursement schedules can be prepared to accommodate most any builder. A mortgage loan professional will assist you in determining the schedule that will best suit the terms of your construction

loan agreement and builder. You and your builder will be asked to sign a draw affidavit prior to any funds being disbursed. In some cases receipts for materials and labor must be provided. After a request is received if necessary an appraiser/inspector will be sent to the construction site to verify the percentage of work completed and the quality of construction. Inspections are performed for the benefit of the Lender only. Inspections are ordered within 24 hours after receiving written requests from you or your builder. Every effort will be made to disburse funds within 72 hours after receiving a request.

Construction Cost Over-Run

Quite simply, you’re going to change your mind about something after you sign a contract and break ground. It’s also quite possible that your builder may make recommendations or suggestions that will require you to spend more money. The average amount of over-run is 10%. We will build what we can into your loan and have a reserve on hand if needed. You cannot increase your initial loan amount without refinancing which will only cause delays. Be certain as much as possible in advance regarding the accuracy of your contract plans and budget. You do not want to risk running up expensive credit cards or borrowing more money that you may not qualify for.