Construction financing is as simple as 1-2-3!


new-home-buildIt’s that time of year again – the Fall Parade of Homes is in full swing, and you’ve made the decision to build a new home. Each builder you visit suggests that you get approved for construction financing… and you try not to show panic or run out the door! With confidence that comes from experience, we can guide you through the process as we lay out the steps for new home construction financing that are as simple as 1-2-3.

We get calls every day from clients who have limited experience with mortgage financing in general, let alone new construction financing! Today’s custom home builders want you to secure financing for the construction of your new home for several reasons. When you finance the construction of your home you save money on the interest and carrying costs that a builder financed project would pass on to you. By excluding the builder’s financing charges, the price of your new home will be less. When you put the new construction loan in your name, with lower financing charges, you save money.

Construction financing is an interest only line of credit used to build your new home. Interest will only be charged on funds that have actually been drawn from the line of credit. Your builder will provide us with the plans, specifications, and contract to build, and the project is appraised as if it were complete. The value of the finished product is an important part of establishing how much we lend. Most homes can be built in 90 to 120 days from start to finish, and our standard construction loan is for 6 months. We can go up to 12 months if needed, based upon the scope of the project. During the time of construction, money will be drawn from your line of credit to make progress payments for materials provided and work completed. You approve every draw. Our title company will verify that all the paperwork is in order, that no mechanic’s liens have been filed by anyone who has provided materials/work for the project, and that all lien waivers have been collected (lien waivers are written acknowledgement that payment has been made for materials and labor for all work completed). The appraiser that provided your initial appraisal will be inspecting the work every step of the way to protect us from paying for work that has not yet been performed. When the home is complete and all work has been done per your plans and specifications, the appraiser performs a final inspection to confirm that the final disbursement of funds can be released and your permanent end loan financing can be put into place.

We have a process that works like a well-oiled machine. We leave nothing to chance, and you will end up with the home you want, the permanent end loan/mortgage product you want, and no worries about having missed paying someone along the way. Visit our New Home Construction web page at And rememberIt’s As Simple As 1.2.3!
– Randy Cullen, NMLS# 326128

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