Residential Construction Loans

 

Building your new dream home? A new home can be an exciting project that involves the whole family.

It can also be a little intimidating. We offer our members interim and permanent financing for their new homes. Enjoy the many benefits of using your member-owned credit union.

Interim Construction Loan

 

An interim construction loan is used to provide funds while the home is being built. This loan is made to the member/home buyer. Typically the member currently owns the land the house will built on, or will be purchasing the land. The contractor should provide the home buyer with certain disclosures explaining their rights under the construction contract, as well as periodic information regarding the construction progress and funds needed.

During the application process, the credit union reviews the contractor's credentials and all building costs.

 

Once you are approved, you are approved for both the construction interim loan and the permanent loan and they merge together effortlessly. Yes, you can lock in your permanent interest rate as much as 12 months in advance, being protected from increasing rates should they rise during construction. The interest rate during construction is fixed, not the usual monthly ARM. Interest only payments are made during the construction phase of your new home.

 

Progress is monitored through the actual construction phase by the credit union approved inspector who examines the property prior to the release of funds. The loan is funded in draws, a draw request will be submitted to the credit union. The credit union advances funds as the construction of the home progresses. Draws are funded according to a specific 'draw schedule'. When the home is complete and all funds for the construction loan are advanced, the construction loan will be refinanced into a permanent mortgage.

 

Permanent Loan

 

When the construction is complete, the appraiser completes a final inspection to certify the home was built substantially according to the plans and specifications. This inspection is to verify that the type of home the borrowers indicated would be built was in fact built, and the value estimate of the original appraisal is still valid.

 

In addition to the final inspection, loan documentation and proof of property insurance is provided to the credit union, along with any remaining items required for the permanent loan processing. The construction loan is then refinanced into a permanent loan.

 

For more information on this product, please call our Real Estate Loan Officer today and you will see that no one does construction financing as simply and hassle free as your member-owned credit union.