A.Financing a new home construction or home improvement project is Cornerstone's specialty. When you are building/remodeling your home, you don't need just a mortgage, you need a construction loan that works for you. Cornerstone is more than just a lender; we are a full service, experienced construction lender!
A. When you purchase or refinance a home, the process is over when the loan funds. With a construction loan, it is only the beginning. The success of your project will depend on how well the 6 to 12 month disbursement procedures meet your finances and your builder's style. A problem in this area could cost you months, thousands of dollars and maybe even your entire project. The variables in qualifying for a construction loan are ten times that of a purchase or refinance loan.
Lack of knowledge and experience by some loan officers are the reasons that as many as 40% of all construction loan requests are denied. Many lenders and brokers dabble in construction, but have not processed enough construction loans to understand the intricacies of the process. Cornerstone's construction loans are underwritten and closed by our construction department employees.
A. Use a detailed project cost estimate sheet to make sure you have accounted for all necessary supplies, materials and labor costs. Your builder should have a detailed building contract that outlines the total cost of the home with specifications, as well as a detailed list and total of all allowances.
A. The required down payment is typically 10 percent on a construction-to-permanent mortgage (minimum 10 percent down based on the cost of the project). In some cases, if you have owned your land more than 12 months and/or have some land equity, no additional funds or down payment may be needed for the construction-to-permanent mortgage.
A. There are many factors to consider when determining the right loan amount. Many people consider their home loan separately from the rest of their finances. A home may be your largest asset, your largest liability and your best resource for tax reduction. The size and type of permanent loan should be determined within the context of your entire financial picture.
Unfortunately some building projects run over budget. It is better to plan for more than you think you need since you can always modify to a smaller permanent loan if the entire available loan proceeds have not been spent.
A.You will receive a monthly billing statement based on the amount drawn from your construction loan. You will be required to make an "interest only" payment based on the outstanding balance drawn from your construction loan, not the full loan amount.
A. A turn-key transaction is simply buying a newly constructed home direct from the builder. If you purchase a home that is complete, you would attain a home purchase mortgage instead of a construction loan. Cornerstone can assist you with a great purchase loan program.
A.We need your contract, plans, and specifications to order the appraisal. Once we order the appraisal we can typically close within two to three weeks so you can begin construction.
A. You may build a home on any amount of acreage as long as there are comparable properties for the appraiser to use to meet the guidelines. In some cases, a portion of the land may need to be surveyed out.
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Q. What if I own a home that hasn't sold, and I want to start building now?
A. In most cases, the sale of your current home is not required to begin construction of your new home. A Cornerstone Loan Consultant will review options with you when applying for your construction and permanent loan.
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Typically, Private Mortgage Insurance (PMI) is required on the permanent loan when your down payment is less than 20 percent of the completed value of the property. However, there are loan programs that will help you avoid PMI; ask your Loan Consultant for details.
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A draw is taking funds from your construction loan to pay for costs during construction. A construction loan works similar to a line of credit where you may request draws to pay for materials and supplies and labor during construction.
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The draw schedule is tailored to meet most builders' standard draw schedules.
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How many draws will I be limited to for my project?
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Cornerstone offers many construction-financing programs. The number of permitted draws depends upon the program you choose, the type of home you are building, and/or what construction program you qualify for.
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Draw funds are typically disbursed directly to an account held by the customer & builder at the bank.
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Who is my primary contact during the construction process?
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Our Construction Department is available to assist you and your builder during the construction process.
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When should I inform my Loan Consultant of any changes on my project?
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Any project changes should be reported to your Loan Consultant immediately.
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What will happen if I need more time to complete construction?
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Our goal is that your house is completed on time and on budget. Your Loan Consultant will work closely with both you and your builder to ensure the project is complete. In the very rare case that the project is not completed on time there may be a small charge to extend the construction phase.
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May I pay down on my loan at any time? Are there penalties?
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You may make principal reductions anytime you wish prior to modification without incurring any penalties.
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Escrows are generally required when you convert to a permanent loan. Your Loan Consultant can help you determine the escrows associated with the permanent financing. Also, please remember that you are responsible for paying property taxes directly during the construction phase.
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Depending on your preference, you may lock in your permanent interest rate at any time. If you are concerned over rising interest rates, you may wish to consider a rate cap which will allow a Float Down feature if rates improve significantly during construction.
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Can I do an 80/10/10 or 80/15/5 on my permanent financing after my construction loan?
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We have many programs to offer you and will find the one that best meets your financial needs.
