Construction Loans

If you are considering building your Dream Home then you will want to contact Doug Heide immediatly.  Doug and Heidesert Mortgage are members of the Evegreen Home Loans Family and offer this very unique loan.  Our construction home loans offer you the ability to finance the building of you new home from the ground up!

Contact Doug at (760) 963-1643 or
by clicking here.


What is a Custom Construction loan?

Borrower financing that allows for the New Construction or Major Remodel of an Owner Occupied SFR, or Second Home (Purchase and installation of an O/O new manufactured home allowed on Two-Step program.)

Types of Construction Loans:

•    One-Time Close:  One loan closing that includes financing for both the construction period and the permanent loan.  
•    Two-Step: Consists of a temporary loan for construction period that must be refinanced to permanent financing upon completion of a munufactured home project.

General Procedures for Custom Construction Loans    

1.    Receive Loan Application
–    Retail Branch is responsible for obtaining loan documentation according to program guidelines:  
  • Including all documentation required on builder for builder review and approval (aka “Builder Package”).
  • Including all documentation on construction project for collateral review and approval (aka “Project Documentation”).
            
2.    Review of Builder Package and Construction Project Documentation
–    Documentation requirements for are listed in One-Time Close and Two Step Custom Construction  Program Descriptions.
–    Credit Approval:  Underwriting can provide a credit review subject to satisfactory review and approval of these items prior to docs.

 
IMPORTANT NOTE:  EVERYTHING CAN CHANGE with the review of the construction and builder   documentation, so the sooner this information can be reviewed, the better.  Do not order the appraisal until these items have been reviewed and approved.

3.    Review of Prepaids – Important Reminders
–    “Prepaids” are costs that have been paid for by borrower in advance of closing.
–    Borrower will typically want credit for these items in order to reduce the amount of funds required to bring in to closing.
–    It is the branches responsibility to gather the required documentation for review and approval by Construction Loan Department. (See section titled “How to Document Prepaids” in program description for details.)
–    Remind your borrower and builder repeatedly:  No work is permitted prior to closing, not even clearing and excavation.

4. Credit Decision
–    Provided to borrower per EHL policies and procedures.
–    All approvals will be subject to builder and borrower conference call with EHL Construction Loan Department to review construction process in detail for purposes of addressing any questions or concerns prior to preparation of loan documents. (Loan Officer encouraged to join this call, but not required.)

5. Close Construction Loan
–    Building Permit is required prior to drawing loan documents to ensure construction starts immediately after closing.
–    If any “prepaids” are presented for credit at closing table, these items will be reviewed AFTER closing.

6. Monthly Draw Inspections Required
–    Construction Loan Department (CLD) will monitor draw process during construction period.
–    Inspections are required a minimum of once per month to ensure project is progressing in a timely manner and according to plans and specifications.
–    After draw request is received, CLD will order inspection from EHL preferred third-party service provider.
–    All changes to project are required to be reviewed and approved by EHL CLD prior to borrower making any changes.  A reduction in the quality of project will not be permitted.
–    No charge for draw inspections during 12 month construction period.

7.  Disbursement of Funds from Construction Account
–    Disbursements are provided a maximum of once per calendar month.
–    Draws are calculated based on line-items reflected on Cost Breakdown.  
–    EHL Construction Loan Department required to review and approve the disbursement amount based on inspection results.
–    Prior to any payment of funds by EHL, builder and borrower(s) are required to sign acknowledgment agreeing to disbursement and it’s application towards contract price.
–    EHL will not advance any funds for items not delivered and installed.
–    10% of the total cost-to-build will be held back from final draw until completion of home has been documented per EHL Custom Construction Loan Guidelines and Practices.  

8. Documentation
For One-Time Close transactions, the following credit documents must be re-verified prior to construction completion and may not be more than 120 days old at conversion to permanent financing:
–    Employment
–    Income
–    Assets

 
Important Note: EHL Loan Officer will be responsible for obtaining the re-verification documents.  35% of the original LO commission amount will be withheld until this documentation is received.

9.  Lock Terms for Permanent Financing
–    A ceiling rate will be locked prior to docs, note will reflect this ceiling rate as a “worse case” scenario. (Depending on the construction term needed, ceiling rate will be approximately .5 - 1% higher than EHL’s current par rate.)
–    30 Days prior to completion and AFTER updated credit/income/asset documentation has been reviewed by Underwriting, CLD staff will contact borrower to exercise rate “float down” option if applicable. (Rate may be locked and converted to EHL’s current market rate at that time.)

10. Conversion to Permanent Financing
–    Loan will be converted to permanent financing per terms of lock.
–    Prior to conversion, EHL is required to receive Certificate of Occupancy (or equivalent) and executed form 442 from appraiser re-certifying value* of home and that it has been completed per plans and specifications provided.   
–    EHL to review and update credit/income/asset documentation according to investor’s guidelines.
* Value must be the same or higher than original appraised value.

11. Extensions
–    If construction is not completed within required time-frame (a maximum of 12 months), an extension of construction loan will be required per EHL extension policy as outlined in Custom Construction Loan guidelines and Practices.
–    .50% Extension Fee required for 2 month extension; payable to EHL prior to modification/extension of loan.
–    Updated credit/income/asset documentation from borrower may be required by EHL simultaneously to ensure conversion to permanent financing is not delayed.
–    Additional loan documents and/or modification documents may need to be signed by borrower(s).

Want to find out if you qualify for an Construction loan?

Call now – (760) 963-1643 or e-mail dheide@evergreenhomeloans.com for a free Pre-Qualification consultation. You can even Apply Now by clicking here.


 


Apply Now

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