Construction loans are short-term, fixed-rate loans used to cover the costs associated with building a new home.
In addition to required financial documents, you must obtain specific documents for approval, such as thorough construction plans, a detailed timeline, and an itemized budget.
Borrowers are able to draw from the loan based on the construction project’s stages. For instance, when the contractor or builder finishes your home’s foundation, our bank issues the necessary funds to cover the next step. You then only pay interest on the amount disbursed as the project progresses.
During the process, we will visit the construction site to monitor progress based on the timeline.
Construction loans typically cover the following items:
Bank of Old Monroe’s lending team ensures you understand the construction loan process and your responsibilities. When the builders finish your home, we’re here to help you choose the competitive permanent financing option that works for you.
Generally, home construction loans have more stringent requirements for approval compared to traditional mortgages.
The first step in obtaining a construction loan, although not required, is obtaining a pre-qualification because doing so gives you an idea of how much you can borrow. Plus, it can help you save on expenses associated with blueprints for a home you can’t afford.
Next, find a reputable builder or contractor. The company you choose should have the experience to complete the project according to the timeline and specifications. You may want to request copies of the builder’s insurance certificates, résumé, business license, and financial statements to prove their trustworthiness.
Finally, gather documents such as contractor references, your detailed plan and project timeline, and the contract between you and the construction company.
Obtaining the funds needed to build the home of your dreams is possible with the Bank of Old Monroe! Our lending team can help qualified borrowers bring their vision to life with a short-term, fixed-rate construction loan. Contact us for more information and to start an application!
Construction loan timelines differ from one lender to another and from one borrower to the next. When you submit your loan application, detailed plans, and cost breakdown to the Bank of Old Monroe, our lending team orders the title search and appraisal. We advise you not to acquire more debt during this process. Generally, it takes 30 days to close the loan after the application is approved.