When Does My Construction Loan Term Begin? 

Your construction term begins on the date that you sign your loan documents. 

How Do I Get My Money? 

At Closing, you will be given an initial draw packet.  This can be filled out and returned to the Construction Lending department for disbursement of Soft Cost funds.  You will be required to show evidence of payment for items such as Permit Fees, Architects and Engineering Fees and other miscellaneous fees that will be associated with your design and approval process.  For verification, you will be asked to include invoices and cancelled checks as evidence of payments made. 

Your builder will also receive draw packets for additional draws.  He or she will need to fill these forms out and submit them to the Construction Lending Department for review and approval. 

What Are On-Site and Off-Site Costs? 

On-Site Costs are any cost associated with the actual construction of your home.  They will include your builder and all of his or her sub-contractors. 

Off-Site Costs are any costs associated with the design and approval of your home.  They will include Architect and Engineering Fees, Permit Fees and other Miscellaneous Fees and Taxes. 

How Much Can I Get For Soft Costs? 

As long as the loan amount has included your out-of-pocket expenses for design and approval fees, Lender will reimburse you for whatever you have spent prior to the loan closing.  No hard cost fees will be provided up front unless construction has already begun on your project.  

Where Do Funds Get Disbursed? 

You can also opt to have the funds directly deposited to your contractor.  The final option is to have a joint check written to you and your contractor. 

How Do I Request A Draw? 

After closing your builder will be sent several draw packets.  These packets will include several forms that will need to be signed by you and your builder.  Your builder will also need to submit an invoice calling out the line items on which disbursements are being requested.

What Is An Interest Reserve? 

During construction, you will be required to make monthly payments based on the amount of your loan that has been disbursed.  The Lender understands that carrying two mortgages can be difficult, so we give you the option of building your payments into your loan.  Your Construction Lending Specialist will calculate an estimated payment total for the construction period.  This amount can then be built into your total loan amount.  Disbursements will be made from your Interest Reserve upon your request.

For More Answers About

One Time Close

Construction Loans

Contact The Cavanaugh Team

 (408) 356-2506

www.thecavanaughteam.com

 Needs List

Paystubs for 1 month                  

Complete Bank Statement(s) for two months

W2's for 09 and 2010

Federal 1040's Tax Returns 2009 and 2010 all pages and schedules. 

Explanation of the source of funds for down payment.

Letter explaining the intent for current residence

Closing statement (HUD1) for the original purchase of the home.

or 

Copy of purchase agreement for Lot

Copy of Signed Contract and Deposit with Builder

Cost Breakdown (Signed by Builder and Owner)

Description of Materials

Copies of bids for any items to be done outside the contract        (well, septic, road, pool)

Paid receipts and cancelled checks for any work completed

Plans including floor plan with dimensions, elevation,            foundation & site map

Site plan showing location of SFR, well & septic

Builder package completed and returned with copy of

Liability Insurance ($500,000), Worker’s Comp Insurance

Contractor’s License.

Course of Construction Insurance – Must be in place at closing.

Soils Report

Fixed price contract signed by both parties

Building Permits

Appraisal

Additional  requirements