| We specialize in short term construction
loans for individuals who are building their own home for their
own use. We do not give loans to build a house for resale,
nor do we give loans for renovation or additions.
Here are some of the features of our construction
loan for owner-built, owner occupied homes:
- Maximum loan amount is 415,000
- Minimum credit score is 700
- Maximum length of loan is 12 months. No pre-payment
fee.
- Maximum LTV/LTC is 65 w/verified income
- Maximum Debt to Income (DTI) ratio is 45
- 6 months of reserves are required
- Unlimited draws with no draw fees
- Builder’s license not required
- Project supervisor not required
- It's OK if construction has started
Here are the closing costs and interest rates:
- Adjustable interest
rates start at Prime + 4 (Current prime rate is 3.25).
Interest is paid monthly on the outstanding balance only.
- 2.00 points processing fee, with one point refunded
if loan is refinanced within 5 months.
- 2.00 points origination fee to Broker. If applying
without a Broker, then 2 points will be paid to Owner Builder
Loan Services.
- 600.00 Underwriting fee
- 100.00 Document prep fee
- 525.00 allowance for inspections
- Appraisal fee TBD
- Closing agent’s costs TBD
- All items above (except the interest rate) are
financed from the loan
Due to the current housing crisis, our loan-to-cost ratio (LTC)
is at the lowest it has ever been at 65%. This means the most we
can fund at this time is 65% of the total cost of the borrower's
project. To determine how much our 65% will equal, take the current
market value of the land, and add to it all the costs to build and
finish the home. Now, multiply this total by 65% and this
will give you the maximum amount we can lend. Prior to receiving
our 65%, the borrower's 35% contribution will be required.
Soft costs such as blue prints and permits do not count towards
their 35%. For example, if the land has a current market value of
$75,000, and the total of all construction costs to build and finish
the home is estimated at $150,000, then the total cost will
be $225,000.00. Now multiply $225,000.00 X 65% and this will give
you the maximum loan amount of 146,250.00. In this example, the
borrower will have to have $78,750.00 of equity into the project
prior to receiving our $146,250.00 construction loan.
If you are not sure how much the total cost will be, but you know
how much equity there will be before the loan starts, then multiply
this amount by 65%, divide by 35%, and this will give you the
maximum loan amount this equity will qualify for. For
example, if the equity is $100,000.00 X 65% / 35% = maximum loan amount
of $185,714.29.
When construction is finished, the construction loan will have
to be refinanced. We do not provide permanent mortgages.
If you have questions call us at 800.543.5600, extension 114.
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