Construction Loans.

House hunting is incredibly difficult these days. In many areas there are more buyers than houses that are available for sale. The high demand and lack of supply has driven up the prices. Buyers are getting into bidding wars with each other, which is raising the prices even further. You may not even find the perfect house that fits all of your needs. Even if you do, it’s going to be overpriced. However, the good news is there is a perfect solution to buying a second-hand house.

You can either build a brand-new home or renovate your existing one. Either way, you’ll end up with exactly what you want. You won’t need to overpay for it, and you certainly won’t need to settle for something that you truly don’t love or even really want. You do need to be aware of the fact that a new construction loan or renovation loan is a bit different than applying for a mortgage to purchase an existing property. Here’s everything you need to know about obtaining a construction loan from us…

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How It Works.

Our unique program provides borrowers with the ability to obtain a construction loan that will automatically convert into a standard 30-year fixed rate mortgage once the construction process is complete. In essence, it’s a one-time close where you secure the construction loan, secure the long-term mortgage, and lock in the interest rate for the long-term mortgage upfront. The construction loan is based on “interest only payments.” That means you only need to pay the interest on the construction loan while your home is being built.

In addition, you only pay interest based on the funds that have been released instead of the full amount of the construction loan. The builder or general contractor receives funds from the bank when they hit certain milestones in the project. For example, they may receive funds from the construction loan when the foundation is completed, or the framing work is done. The builder or general contractor has up 12 months to complete the project from start to finish.

Once the construction phase is complete, your loan automatically converts into the standard 30-year fixed mortgage with the interest rate that you locked in at the very start of the process. It makes perfect sense to lock in your 30-year fixed interest rate now because interest rates are projected to rise in a significant manner over the next twelve months.

Construction Loans
Guidelines

  • 12 month construction phase- interest only payments during construction phase
  • Primary residence or Second Homes only
  • Single family unit properties only
  • Borrower may not be their own contractor
  • Must hire a licensed General Contractor

Documents typically required before file into process:

  • Purchase and Sales Agreement – Land
  • Copy of land deed if lot is already owned
  • Copy of Legal Description/Property Deed
  • Fully executed Construction Contract to include cost estimates
  • Copy  of Plans and Specifications
  • Construction Loan Agreement signed by all parties
  • Copy of Builders License  and Liability Insurance binder
  • Copy of canceled check for down payment (if applicable)
  • Copy of septic system approval by the local health officer (if applicable)
  • Collect Insurance Binder with Builder’s risk coverage

Prior to funding

  • Copy of Building Permit

Construction/Rehab Loans

Guidelines

  • This is for refinances transactions only not on purchase transactions.
  • Cost of the rehab must be $75,000 or above to qualify for this product
  • 15 & 30 Fixed rate products only
  • Primary residence or Second Homes only
  • Single family unit properties only
  • Borrower may not be their own contractor
  • Must hire a licensed General Contractor

Documents typically required before file into process:

  • Copy deed
  • Fully executed Construction Contract to include cost estimates
  • Copy  of Plans and Specifications
  • Copy of Building Permit
  • Disbursement Schedule Disclosure to be signed by both builder and borrower
  • Construction Loan Agreement signed by all parties
  • Copy of Builders License and Liability Insurance binder
  • Copy of passing title V to be in compliance with number of bedrooms and bathrooms. To include additional bedrooms and/or bathrooms to be added by the addition. (If applicable)
  • Collect Insurance Binder with Builder’s risk coverage

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Newport Capital Corp. possesses expertise to advise on investment strategy, asset management, finance, distress management, acquisition, and disposition of assets.

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978-537-5800