Construction

Construction lenders are becoming few and far between. Here are a couple of key areas to be aware of:

Is the lenders approach loan to value or loan to cost. This will determine if you can finance all of your costs or come in with a percentage of your costs Construction to Perm, One time Close, Two Time Close, Construction Only. The lenders will explain these options in detail so you can choose the product that will work best for your situation

Rates– The lenders may offer a “construction rate” that rolls into your permanent rate, Fixed, ARMS, Floating all are common rate options on construction loans. Construction loans due to represent a riskier segment of lending for banks expect differences from lender to lender.

Terms 1 year, 15 year and 30 year terms are all common terms available

Reserves are monies left in your bank accounts to support your ability to repay the mortgage. The underwriter can request that amount to be 0 to 18 months of the proposed payment left if your bank account

Contingency is amount that is either added to your builders contract, the financed amount or additional monies left in your bank account earmarked for potential cost overruns or change orders.