Interim Construction Loan Overview Information

(Last Updated On: May 17, 2017)

Step 1: Apply for Financing

This information is current as of  Friday August 18th 2017
  1. Fill out and Return a Loan Application
  2. Copy of last 2 months of bank statements
  3. Copy of last 30 days’ paystubs
  4. Copy of past two years’ W-2
  5. Copy of past two years’ tax returns
  6. Landlord’s name and contact info for past two years of renting
  7. Non-Expiried Driver’s license, passport or state I.D.
  8. Property and lot documentation
  9. Builder’s plans and specifications
  10. Loan Specifics Call us

Step 2a: Get Approved for Financing

Financing will cover the cost for the lot itself and the interim construction. The interim construction will include building construction, architectural design, utility hook-ups, water well, septic system, flatwork, driveway and/or pool. Interim or construction financing describes the first half of the “construction-to-permanent” loan name, while the final, permanent mortgage accounts for the latter.

Note that if you have found a piece of land or lot that is ideal but are not ready to break ground, a lot loan may be the best option for you. Often, the current landholder may be able to sell to you directly and work out a private payment plan.

The application process is as follows:

  • Appraisal & title ordered
  • Appraisal received
  • Interim loan submitted & approved
  • Title documents received
  • Closing documents sent to title company
  • Interim loan closed
 

Step 2b: Get Builder Approved

 
  • If builder is not approved Builder goes through a 1-time approval process
  • If your final loan will be a VA loan then the builder Must have a VA Builder Number.  Have the Builder contact us for the paperwork.  This takes a few weeks to obtain and can be done simultaneously with the items above
  • Note: We, our investors or lenders do NOT Finance Barndominiums or Mobile Home additions
 

Step 3: Begin Construction

The interim/construction loan is a line of credit. This line of credit is established solely for paying the costs associated with the building of your custom home. It works just like a credit card. You make a charge as you need money to pay the construction bills. This charge is called a draw.

How Interim Construction loan Draws work:

  • A draw request is completed by you or your builder
  • The draw request is signed by you then forwarded to the interim lender
  • The interim lender sends an inspector to your home to for approval
  • The draw funds are now available after inspection
  • Like any credit card, you will pay interest on the amount charged
  • The credit balance will increase as you take draws
  • The payment of interim interest is made monthly. 

Steps 4: Transfer Construction Loan to Permanent Upon Completion

We underwrite your permanent loan after construction at the same time.  Saving you time, aggravation, and Money

  1. The construction loan requires repayment upon completion and since we underwrite and fund all loans in-house we underwrite you for the permanent loan at the same time.
  2. If you are using a 100% permanent loan such as VA then the down payment that you put in to start the construction loan is given back to you to pay closing costs, escrows & etc.  After those are paid you may be refunded the balance of the monies.  Note this is NOT Cash out.  You are getting back the money you already put in as a cost and they must be documented through receipts, change orders and Closing HUD from the original loan.  

 

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