[Construction Loans]
Construction Loans are structured to be permanent mortgages, covering both the lot you buy and the house you build on it. With an adjustable-rate construction loan, you will enjoy the advantage of one-time closing costs, saving you both time and money. An adjustable-rate mortgage often has lower interest rates and lower payments than other options. Additionally, because of the lower rates and payments you may qualify to borrow a larger loan amount. Most loans are made with a construction period of six months during which you make interest-only payments. After the six month construction period, you will start making your regular principal and interest payments.
Upon completion of the home, our construction loans can also be refinanced into a fixed-rate mortgage. Our mortgage experts will make this transition a simple one for you. By converting your adjustable-rate mortgage to a fixed-rate mortgage you may be able to lock in an attractive interest rate and find peace of mind that your principal and interest payments will remain the same over the life of the loan.
The construction loan can be administered one of two ways. If you hire a general contractor to manage construction, we will issue checks based on a pre-determined schedule to coincide with completion percentages. If you are serving as your own general contractor, the bank writes checks to cover your vendors' invoices. These smaller payments are known as "draws" on your loan account.
Your general contractor and main subcontractors must be approved by the bank. Our Loan Department has a list of approximately 100 approved contractors. If your preferred contractor does not appear on this list, you may submit a Contractor Qualification Form for review.
Our loan officers are local residents with extensive knowledge about local construction and contractors. Their expertise will aid you in making important decisions regarding your new home.
ADVANTAGES OF CONSTRUCTION LOANS
- Interest-only payments during the construction phase.
- A flat one-time closing fee helps you budget your expenses.
- Once construction is complete, the loan automatically converts to a permanent adjustable-rate mortgage loan, eliminating concerns, hassles, and costs of finding permanent financing elsewhere.
- Your adjustable-rate loan can be refinanced into a fixed-rate loan if you wish.
- No fee is charged for the first fives draws.
- Expert loan officers lend you their knowledge to help you make decisions.
