Construction Loans in Missouri

Construction loans are short-term, fixed-rate personal loans that cover the costs of building a new home.

The Bank of Old Monroe’s lending team ensures you understand the personal 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 best suits your financial situation. 

Benefits of Construction Loans

Home construction loans come with several notable advantages. First, they offer flexibility during the building process. Unlike a single lump-sum payment, these loans disburse funds in stages, allowing for project adjustments or changes.

Construction loans are a cost effective lending option. Interest is charged on the amount disbursed, so you only pay for what you use. This unique feature can significantly lower the overall cost of your project.

The Bank of Old Monroe provides competitive rates, making your dream home more affordable. Our lending team works closely with you to ensure details of the loan are clear prior to proceeding.

Once construction on your new home is complete, Bank of Old Monroe offers various permanent financing solutions.  Contact a loan officer to apply for an adjustable or fixed rate mortgage.  

Stand-Alone Construction Loans

Stand-alone construction loans are separate funding vehicles from mortgages. They are an excellent option if you have substantial cash and foresee a lengthy construction process. 

With greater flexibility, you can adapt your plans relative to an unexpected change in your budget, project, rates, etc. 

At the Bank of Old Monroe, we strive to offer competitive home construction loans. Our lenders guide and support you throughout the process, ensuring you obtain the best loan for your needs.

How to Obtain a Home Construction Loan in Missouri

To start, secure a pre-qualification. Doing so identifies your borrowing capacity when applying for a construction loan. 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. Your chosen company should have the experience to complete the project according to the timeline and specifications. To establish trustworthiness, request copies of the builder’s insurance certificates, résumé, business license, and financial statements.

Finally, collect the required documents. These include contractor references, your detailed plan, project timeline, and the construction company contract.

Timeline of Construction Loans

The home construction loan timeline is crucial but varies depending on the lender, borrower, and project requirements. Here’s a more in-depth look at the timeline of home construction loans:

1. Initial Application and Documentation Submission: The construction loan process begins with submitting the application, detailed plans, cost breakdown and necessary financial documentation to our lending team. These documents serve as the foundation for the loan approval process. They are essential for assessing the practicality of your project.
2. Title Search and Appraisal: We will act once the lending team receives your application and supporting documents. They initiate a crucial step: the title search and appraisal. A title search aims to confirm the legal ownership of the land and any existing liens or constraints. The appraisal assesses the property’s value, helping our team determine the loan amount.
3. Debt Management: During the next phase, borrowers need prudent financial management. We strongly advise not to acquire additional debt during the application and approval process. Additional debt can harm your debt-to-income ratio (DTI), a crucial factor in the lending team’s decisions. 
4. Loan Approval: Our team assesses documentation and project feasibility after the title search and appraisal. These documents must meet specific criteria for approval. The approval phase typically involves reviewing your credit history, income, and construction plan details. A lower DTI ratio and a strong credit history improve your chances of approval.
5. Closing the Loan: Once you’ve successfully navigated the approval phase, the final step is closing the loan. You’ll sign essential documents at this stage, and the Bank of Old Monroe will disburse funds for your construction project, officially starting your home-building journey.

Generally, it takes around 30 days from the point of application approval to reach the closing stage. However, the duration may vary due to project complexity, processes, and unforeseen circumstances.