Construction Loans- Our construction loan is a two time close loan which means we close you with the interim bank first and then the permanent lender later once the home is 100% complete.
Construction loans require good credit and scores over 720 but scores down to 680 may still be possible. Down payment on these loans is as little as 10% down or more in some cases and land equity may be considered. There are two sets of closing costs but its not double as the second closing is usually just the lenders underwriting fee, title fees and setting up the escrow accounts.
| This type of financing differs from regular purchase money or refinance home mortgages in the way the loan amount is calculated and the way it is structured.
Before calculating the loan amount, we need a basic budget.
The main components of construction loans that are included in the budget are as follows;
1- Soft costs; consisting of architectural plans, engineering and permit fees.
2- Hard costs; which are all the actual physical costs of construction.
3- Closing costs; consisting of origination and lender fees, title, and closing fees.
4- Inspection fees.
5- Reserves; consisting of interest reserve and contingency reserve.
6- Existing lot pay off.
Regular purchase money or refinance mortgages are based on Loan to Value Ratio (LTV). Where as, construction loans are based on LTV as well as Loan to Cost Ratio. Further more in a normal mortgage the closing costs are added on after calculating the Loan to Value, whereas a construction loan is inclusive of closing costs.
There is a lot more information available on these Construction loans so please call us for details and we do business with several respectable builders in the Acadiana area so call us today if your ready to build your new dream home!