We are here to help guide you through the construction of your new home. An overview of the process is outlined below, but for more information, just contact us. We can answer your questions and ensure that the whole process goes smoothly for you.
Construction Loan Application
Apply online or at any of our banking centers. Once you apply, you’ll be asked to provide the standard credit documentation, such as W-2’s, current pay stubs, and bank and investment statements. You will also be asked to provide a copy of your contract with your builder, plans and specifications of your project, and cost estimate breakdown.
Once your plans have been finalized, the bank will order an appraisal. The appraisal will give an estimated value of your new home once construction is completed and is based upon the plans and specifications from your builder.
Title & Insurance
During construction, you will need to secure a construction title policy on the project. Once your construction is completed and you secure permanent financing, your fee paid for the construction policy will be applied to the final title policy.
You or your contractor must also carry a builder’s risk insurance policy while your new home is being built. Typically, any local insurance agent can write a builder’s risk policy. This policy protects you from any damage that could occur to the home during construction.
Loan Processing & Approval
Once all of your information from the application has been verified, your loan will be underwritten. Upon approval of your loan request, a closing date will be scheduled for your construction loan.
Construction loan interest rates are tied to the prime lending rate and will vary based on your credit scenario. Most construction loan terms are six to nine months.
At closing, you will pay closing costs. Some of the closing costs are one-time expenses that will be applied to your permanent loan upon conversion of your construction loan.
During the construction period, interest is charged only on the funds that have been disbursed. As the construction of your new home progresses, advances are made on your loan when you or your builder submit a written disbursement request, accompanied by receipts for project expenses.
To protect you and your property, each disbursement check will include a lien waiver on the back. Once the check is cashed, the payee agrees that payment for the materials or services is acknowledged. It is very important to secure lien waivers from all suppliers and sub-contractors involved to prevent future liens placed on your property.
To further protect your interest in the project, the bank will conduct monthly inspections to check the progress of the property construction. There is no charge for these inspections.
Once the construction on your new home is nearly completed, the next step is to apply for a permanent loan. We offer an array of traditional and progressive home loan options. Our friendly, experienced lenders can help you find the best loan for your new home.