Log Home Construction Loans
Some "Frequently Asked Questions" about New Home Construction Loans you should be asking us about
Q: What types of "homes" are mortgages available for "New Construction Loans"?
A: Log Homes, Modular Log Homes, Timber Frame Homes, Stick Built Homes, Regualr Modular Homes, Large Mansion and Estate Homes, Panelized Custom Homes.
Q: Is this a “single-close” mortgage where the loan starts off as a “construction loan” during the building stages and then automatically converts to a “regular permanent mortgage” when the home is completed?
A: YES - There is only “1” closing, upfront, before construction begins. During the construction stages, you will make “interest-only” payments based on the amount of funds that are disbursed. When the home is finished, the regular mortgage will begin about 45 days after the loan has modified into the “regular permanent mortgage.”
Q: In the case of a Log Home, Timber Frame Home, or Panelized Home, when does the manufacturer of the above get paid the balance due to them?
A: When the materials are delivered to the construction site, the balance is paid at that time.
Q: When can a home owner "Lock-In their Interest Rate"?
A: A rate can be "locked in" anytime a "formal loan application" is prepared up until the "settlement date."
Q: Does the lender approve the Manufacturer, Dealer or Builder?
A: NO - The selection of the above is made solely by the home owner.
Q: Can a home owner also be the general contractor?
A: MAYBE - Home building is a complicated task that requires budget, pricing and supervisory skills beyond the technical knowledge of the building process. Hiring a Contractor with experience and the appropriate insurance coverage is the best way to deliver a home within the budget and in the proper time frame. However, if a home owner has experience in building homes it is possible for them to be their own general contractor. Since each case is different, always call to discuss this possibility.
Q: What type of contract should a home owner have with a builder?
A: An all-inclusive fixed price contract is recommended with all the features added into the price. If there are items added after the closing has occurred, the home owner will pay for those out of their pocket rather than increase the mortgage amount.
Q: When does the home owner put their down payment funds into the transaction?
A: All of their funds are collected either before or at your closing. Their money is used first as the home is being built. The balance of the funds are drawn against the mortgage in the form of draws per an agreed-upon draw schedule.
Q: If the home owner already owns their land, can the equity in the land be used towards the down payment requirement?
A: ABSOLUTELY - Even if there is a loan against the land, we will use the difference between the value of the land minus the loan amount as "equity."
Example: The appraiser says the land is worth $100,000
The home owner still owes this much - $ 40,000
The amount of equity that can be used towards their down payment is $ 60,000.
Q: What states are mortgage funds available for "Construction / Permanent Loans"?
A: Connecticut, District of Columbia, Florida, Delaware, Massachusetts, Maryland, Maine, North Carolina, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Virginia, Vermont.
Q: What is the minimum and maximum mortgage amounts issued?
A: They generally range from $100,000 to $3,000,000. However, if a home owner wants a mortgage for less or more than the above, call to discuss their particular request.
Q: What are the “usual down payments” required for a construction to permanent mortgage?
A: Call us for specifics
Q: What FICO Credit Scores are needed in today's mortgage environment?
A: Scores tend to change often, Call us for specifics
Q: APPRAISERS… Do you use appraisers who are familiar with new construction?
A: Yes - Only approved Appraisers who have knowledge reviewing a Construction Contract, plans, and specifications will be "allowed" to perform the appraisal and inspections.
Q: APPRAISALS… In the case of "log" and "timber frame homes" does the appraiser need to find and use ALL log home or timber frame comps to come up with a value for the home to be built?
A: No - The appraiser can use a combination of Log,Timber Frame, Stick or Modular homes to come up with a value as long as at least "1" comp is of a similar style as the one to be built.
Q: Many times people own a home with a lot of equity in it but they haven't sold it yet. Can that equity be freed up prior to that home being sold?
A: The home owner will probably qualify for a "home equity" loan and can use that money for their down payment and closing costs for the home they want to build.
Q: What is the first step to applying for a Construction/Permanent Loan?
A: Go to www.loghomefunding.com and go into this tab: "Application Booklet" Print out the application booklet and then email or fax it to us.