Jen Guidry > Loans > Construction Loans

Construction Loans

One-Time Close

  • Just as it says…you close one time. One set of closing costs and your rate is locked at the time of closing.
  • Offers a modification option to qualified borrowers upon completion.
  • Affords borrowers confidence in knowing that their permanent loan is secured.
  • Loan payment is interest only based upon drawn funds during construction and then modifies to permanent and fully amortizing loan once home is complete.
  • Recast options are available.

Two-Time Close

  • Borrower gets separate construction loan and then has to re-qualify for a separate permanent loan.
  • Perfect for borrower who wants to use a specialty program for the permanent loan (such as VA or certain jumbo loans).
  • Perfect for borrower who has home to sell, but doesn’t want to move twice. Can qualify with higher debt-to-income ratios.
  • Downfall: 2 sets of closing costs (with most lenders- NOT First United)— construction loan and then for per
    manent loan. Also subject to rates rising during construction period for a permanent loan. Rates could always decrease too!

Loan To Value

  • 95% LTV/LTC to $510,400
  • 90% LTV/LTC to $500,000 -680 score
  • 90% LTV/LTC to $650,000 -requires 700 credit score and other program guidelines
  • 85% LTV/LTC to $1,500,000•70% LTV/LTC to $2,000,000 

Misconceptions

  • All banks/credit unions/Mortgage Companies are created equal.Absolutely not! We urge you to shop around. EXPERIENCE is also a key aspect.
  • I need 20% down in order to be able to build a home.Absolutely not! We offer as little as 5% down on conforming loans and as little as 10% down on jumbo loans.
  • I don’t need insurance on the house when it is being built. Builders Risk Insurance is required (either paid by builder or borrower) and Liability Insurance is also highly recommended.
  • Construction Loans and One-Time Close Construction Loans are so difficult to get, I might as well not even try.They really aren’t difficult if you re working with someone who is experienced in construction lending. They are just like any other loan, except there is just a little more paperwork involved. The process is exciting and much easier than you would think!

FAQs

How much money do I need to put down on a Construction Loan or One-Time Close Loan?

On a conforming loan amount (<= $510,400) , as little as 5% is required. On a jumbo loan, as little as 10% down is required. *Example: You could have a total project cost of roughly $537,000 including land payoff and only put 5% down!

How many closings do we need to go through in order to build our home?

Anywhere between 1-3!
Choice A: Buy lot, do Construction Loan, refinance with permanent loan = 3 closings.
Choice B: Buy lot, do One-Time Close Loan = 2 closings.
Choice C: Close on lot and One-Time Construction Loan at same time = 1 closing.

How can I actually coordinate closing on everything at one time?

It’s kind of tricky, but it can be done!
Easiest: Buy lot from the builder or developer that is building your home.
Harder: Have your builder picked out ahead of time. Design your home and complete the plans, specs and most of the budget (except for the site costs). Seller of lot must agree to a slightly longer than normal closing time (45-60 days) so that you can get final bids for site costs finalized before everything goes to the lender.
Hardest: Find seller of lot that is willing to have a very extended closing time-frame (up to 120 days) so that you have time to find builder, do home design, plans, specs etc. and for lender to go through their process.

What is the different lengths offered on the construction loans for build time?

Typically, a 12 month construction period is allotted. You just have to let the lender know up-front what is expected. If you run into a snag, we will give you up to an additional 6 month increase in time.

Do I make payments on the loan during the construction period?

Yes. The payments are interest only based on what is drawn.

If I already own my own lot, can I just use my equity as my down payment?

YES!! In some cases, your land equity can cover your entire down payment and closing costs.

When is my down-payment due?

Your down payment is due when you close on your loan.

Does my builder need to get vetted with First United?

Yes! We will have the prospective builder fill out a questionnaire and then will check references and run business reports on them if we have not previously worked with them. We do this for both your protection and ours.

What if I want to build the house myself?

No! You cannot be the builder of record for your own home. You will have to find a different builder of record. The borrower cannot be the same person as the one who also signs the mechanics lien. If you are a builder and would like to build your own home, First United Bank (not the mortgage company) may be able to finance this for you. The bank also does spec lending…so just inquire!

Is there a limit to the amount of draws a builder can take and how involved is the borrower in the draw process?

Typically, draws are about once a month, but we will allow up to two. Borrowers and the builder have to sign off on each draw before it can be processed. Once a signed draw request is received, we will send an inspector out there to make sure the work is completed. Upon satisfactory receipt of the inspection, we will fund the draw request. This process takes approximately 3 days.

What if I want to put more money down once the house is complete? Will it change my end payment even with a One-Time Close? What if we don’t end up using all of the money that we were allotted in the construction loan?

You can absolutely make a principal reduction when the loan goes to a permanent loan and it will lower the end payment. Also, whatever money you don’t use during construction will go as a principal reduction on the end loan

Can you use the One-Time or Two-Time Construction loan for major renovations or for a tear down?

YES! You can do these loans on a home you already own or for a home that needs major rehab that you would like to purchase.

Team Guidry

Jennifer Guidry

Mortgage Loan Officer

Ryan Fay

Mortgage Account Manager

Rose Hernandez

Mortgage Loan Assistant

Robert Meagher

Mortgage Loan Assistant

Mary Moore

Mortgage Loan Assistant

Contact for Assistance

Our Services

Need Help ?

Please feel free to contact us. We will get back to you with 1 business day. Or just call us now
210-619-2690
jguidry@firstunitedbank.com

APPLY NOW!

CLOSING TIMELINE
Purchase and Construction Loans: 30 days or less
Refinances: 90-120 days

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