Residential
Construction Loans Major features of our
residential construction loans:
- One time closing with one appraisal
- Ground-up and major remodels
- Construction terms 6,9,12,15,18 months
- Loans to $3 million
- Fast credit approvals
- Full Doc, Limited Doc, Stated Income
Q. What is a Construction-to-Permanent
(CTP) Loan?
A. Often, getting approved for a construction loan can be tricky.
In many cases, two loans are required--one for construction and
one for permanent financing. Usually you will have to pay closing
costs on both loans, not to mention the extra paperwork, time and
hassle involved. But we offer a single-close Construction-to-Permanent
Loan that combines both construction and permanent financing into
one loan.
Our Construction-to-Permanent Loan allows for a construction
period of 6 to 12 months. Other options are also available. And
when your project is complete, the loan simply converts to a permanent
mortgage.
Q. Besides a CTP Loan, what other
costs may be associated with the construction of my home?
A. In addition to the contract price, it is common for a construction
lender to build a contingency reserve into the loan. This is a specified
percentage or dollar amount usually required by the lender in case
of unforeseen circumstances that could negatively impact the construction
of your home. The amount required is usually based on a percentage
of the contract price, on-site costs or loan amount.
Additional costs will vary, and may include construction loan closing
costs and fees and special insurance requirements. But don't worry;
our Construction-to-Permanent Loan includes on-site
costs, off-site costs, closing costs, interest reserve, contingency
reserve and lot purchase or value.
Q. What does the term "cost
plus" mean?
If I contract for work to be done, doesn't it automatically mean
that everything is covered? A. Not always. Some contracts are referred
to as "cost plus" because they guarantee the price only
for the contractor's supervision of the job and may exclude a portion
of the costs for materials and labor. Other contractors may cover
both labor and materials but include a clause that permits the contractor
to charge more if there are material shortage or increases in costs.
You will want to clearly define with your contractor what is covered
and is not covered.
Q. When will I have to make loan
payments?
Our Construction-to-Permanent Loan program includes an interest
reserve, which means that you will not have any payments out of
pocket during the construction period. We will incorporate an interest
reserve account within the loan amount. Depending on how quickly
you use your construction funds, there may be sufficient funds within
the construction loan to carry you through the entire construction
period. As each construction project is unique, you will need to
discuss your options with your Construction Loan Specialist.
Q. Will the payments on my construction
loan include principal and interest?
Not necessarily! You may have interest only payments until the house
is completed. Generally speaking, this means that interest is charged
only on the amount of funds used. Interest on our Construction-to-Permanent
Loan is charged based on the funds used. Payments are interest only
during the construction period, converting to principal and interest
payments upon completion of the home.
Speculative
Construction Loan (SPEC)
Major features of our Spec loans:
- 24/7 online draw requests
- Financing up to 90% of the total project cost
- Loans up to 80% LTV
- Loans up to $1.5 million. Larger loans on exception
- Up to 4 loans to same builder within same subdivision, market
or neighborhood
- Lot draws up to 60%
- Land equity and pre-paid costs can be used as down payment
- No DTI ratio calculated
Q. What is "Spec" construction?
Contractors, builders and developers who are building a home without
a guaranteed sale upon completion are said to be building on "Spec",
which is short for "Speculation". These individuals and
companies are speculating that they will earn a profit when they
sell the newly constructed home. Our program is specifically
designed for these types of projects.
Q. What does it take to qualify for
a Spec Loan?
This is a list of requirements to meet:
• 680 middle credit score
• 10% post-closing liquidity of the total loan amount
• Minimum GPM (gross profit margin) of 15%
• Full documentation only
• Only approved Builders with 5+ years experience in the building/marketing
of residential SFR's are acceptable as GC's.
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