Construction Vs. End Loan
Construction Perm Loans are available where?
In-Footprint Counties in Ohio and Florida as well as 3 Counties in Kentucky (Boone, Campbell and Kenton)
TFSearch: Mortgage Lending Areas (All counties highlighted in Blue)
Vs. End Loan is available in any state we offer Purchases
Our Max Loan Amount is $1,000,000 for a Construction Perm Loan
True
Super Jumbo Loans are not offered for Construction Perm Loans
What is our Maximum Loan To Value for a Construction Loan?
85% - Borrowers are required to put a minimum of 15% Down.
(Remember if the Lot is already owned by the Borrower- the Value is credited towards their Down Payment)
How long does the Builder have to complete the home after the loan has closed?
12 months
*If Additional time is required, then an extension option of 3 months is available with fee (Pg. 4 of the Residential Construction Loan Agreement)
Do our Construction Perm Loans offer a 360 Day Rate Lock?
No- Our Construction Perm Loans only offer a 60 Day Rate Lock
If the Property is in a Trust, it must be a Revocable Trust.
False- The property cannot be in a Trust with a Construction Perm Loan.
What Amortization Term would be entered for a 15 Year Loan?
168
180 -12 months to build = 168 months
________ Risk Insurance is required PRIOR to close for all CP Loans
Builders-
Builders Risk Insurance is required PRIOR to close
What question would you ask to determine whether the loan would be a Construction Perm Loan or an End Loan?
Is the Builder funding the new build, where you will purchase the home once it is complete or are you responsible for funding the build and the Builder would need to do draws during the construction phase?
If the Builder is funding the entire process, this would be our End Loan- quote as Purchase (It is possible the 360 day rate lock may be required)
For all Programs that require a rate bump, the rate bump will remain for the life of the loan.
True-
This includes the .25% Rate Bump for No Auto Pay and the .25% Rate Bump for the Construction Perm Special Loan Program.
If the Borrower Owns the Lot, what Box MUST be filled in prior to running the Rate Quote?
The "Year Lot Acquired" Box.
This is located in the Bottom, Left Corner on the Point of Sale Screen.
This will prompt for additional information on the Construction Loan Worksheet. (Orange Barrel)
What must be completed before the Builder can request each Draw?
An inspection must be completed before each Draw is requested.
(5 draws)
When is Construction able to start when doing a Construction Perm Loan?
Once the Loan closes and our mortgage has been filed.
Vs. End Loan is a Standard Purchase, so the construction of the home can already be started or maybe even partial complete.
Third Federal will allow the Borrower to be their own contractor?
False- we will not allow the Borrower to be their own contractor.
In the Orange Construction Barrel,
____ + _____ = The Appraised Value
Total Construction Price + Lot Sales Price = The Appraised Value
Cost to Build $450,000 + Lot Value $100,000 = $550,000
When entered on the Orange Barrel, the total will carry over to the Point of Sale Screen as Appraised Value
The Borrower is responsible to pay The Property ______ during the Construction Phase.
Taxes
Borrowers are required to pay ______ ______ payments during the Building Phase.
Interest Only Payments-
Principal Payments can not be made.
No funds are disbursed directly to the Builder at the loan closing.
True- The Borrower is responsible to provide any startup funds to builder prior to the loan closing.
*Exception- We would only disburse funds to pay off the lot, if applicable.
What is the difference in Closing Cost between Construction Perm Fixed and Construction Perm Special Fixed?
The 1% Construction Fee
The Closing Cost will be higher by approximately 1% of the loan amount on the Fixed vs. The Special Fixed.
Example: $300,000 Loan Amount = $3,000 more in closing cost to get the lower interest rate.
Name 1 of the 4 items we collect from the Borrower prior to converting the loan to permanent financing once the final draw is processed.
1. Property Mailing Address Form
2. Dwelling Insurance
3. Certificate of Occupancy
4. Payment of the Final Interest Bill