Construction Loans

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Here are the Construction Loan Guidelines broken down into topics:

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2020 New construction loan process Simplified version

1. Pick floor plans

    a. Online is best, fastest, cheapest

    b. Local architect

        i. Plan on spending $3,000 – $5,000

        ii. 1-3 months

2. Meet with builder to discuss feasibility.

    a. Get rough idea on cost

    b. Is it feasible on your budget?

    c. Is it feasible on your lot if you already have one?

3. Identify lot

    a. Estimate cost to develop lot

    b. Feasibility study

    c. Septic site?

        i. Plan on a lengthy process if not one

    d. Lot loans

        i. Rates currently 5.5% – 6.5% depending on length of time

        ii. Better rates with shorter terms

4. Construction loan

    a. Complete loan application and provide all required documentation to the bank

    b. 1st we will approve you for the permanent mortgage before giving you a temp. loan

    c. Very important not to change your financial status during the process. i. See Do’s & Don’ts checklist

    d. We meet and get rough numbers on how much it will cost

    e. We will take plans, specs, cost, + land and have it appraised

    f. 30ish days to close

    g. Rates are Interest only – 12 months

    h. Some will need down payment, some will not

    i. If DP required, funds typically used towards 1st draw

    1st draw is usually the largest (site prep, rough drive, excavation, footers, foundation framing package, builders fees, labor)

    j. Rule of thumb: average payment is 60% of fully drawn amount

5. Plan on it taking 4-8 months.

    a. Never make concrete plans based on a certain closing date

6. Do not make any changes once you pick your plans

    a. They cost a ton of money

    b. Makes the process extremely stressful

7. Enjoy the process a. if you are one to freak out easily, you will need to hide your ugly lol

8. Expect big setbacks

    a. Happens 100% of the time

    b. its all normal and a part of the process.