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Construction Loan
Meet with your MidCountry Mortgage construction loan adviser to complete an application and to discuss the best construction option for you. Be prepared to provide documentation.
A Construction loan is the money used to build your new home; the permanent loan is to pay off any liens or mortgages associated with those construction costs.
Once your loan switches from a construction loan to a permanent loan.
MidCountry Mortgage will not allow a homeowner to be their own general contractor/builder.
It depends on the type of construction loan configuration. Please discuss with your MidCountry Mortgage construction loan adviser.
Up to 60 days prior to closing but no later than 15 days prior to closing.
When you lock your rate depends on your permanent loan financing (one-close or two-close). There are options that allow you to lock your permanent loan rate 12 months prior to permanent loan funding. For more details, discuss with your MidCountry Mortgage construction loan adviser.
MidCountry Mortgage will deposit up to 5% of your builder’s costs at closing.
Land cost, whether it’s to pay off the remaining balance on a lot loan or if it’s to pay the full cost of the lot; soft costs (permits, design costs, etc.) as long as those costs are accounted for in the budget and an invoice is provided.
No. However, your building permit will be required prior to the first disbursement of any construction-related funds.
The builder can request and receive funds by virtue of submitting a draw request based on the percentage of completion.
A construction loan is a non-revolving line of credit. A draw is an advance against that line for costs associated with building your new home.
Each draw will be reviewed by the MidCountry Mortgage Construction Draw Liaison within two business days of receiving the request. Once all required documentation is received, including a third-party inspection, funds will be wired to the disbursing agent - usually the title company. The disbursing agent will then disburse funds to the appropriate parties.
No. It is important that you understand the provisions and specifications of your construction contract and monitor the work and completion yourself. The inspection that is completed by third-party inspection firms (qualified professionals) prior to disbursing funds is made to confirm the approximate state of completion of the house.
Yes, with limitations. Up to 50% of material costs can be considered when construction is at an appropriate stage. Advance funding for custom-made cabinets, for example, is possible with proper explanation. Payment for such advances would go directly to the material supplier and will be considered a draw for all practical purposes.
No.
Your builder should submit draw requests only when the percentage of completion justifies the request. For example, the builder should not request 100% funding for foundation if the foundation is only 50% complete, as determined by the third-party inspection.
Changes to the construction contract are often shown as “change orders”. These change orders may amend the contract and may affect the overall contract price and require you to cover the additional costs. MidCountry Mortgage must approve any change orders that substantially impact value or loan amount.
A contingency reserve is a budgeted amount of money above and beyond the contracted price with your builder that is set aside for any unforeseen cost overruns. In some cases, a contingency reserve is a prudent option for the homeowner and, of course, you do not pay interest on the money unless you need it and it is disbursed. Discuss with your MidCountry Mortgage construction loan adviser about the options for contingency reserve for your project.
Yes. MidCountry Mortgage requires that you obtain a homeowner’s insurance policy with a Builder’s Risk rider/endorsement. This is to provide protection not necessarily related to construction and to assure there is no gap in coverage at completion.
MidCountry Mortgage requires a Completion Certificate/Final Inspection from the original appraiser confirming 100% completion.
The construction loan term maturity is 12 months. MidCountry Mortgage will consider longer terms on a case-by-case basis.
You must submit a written request to extend your maturity date. The request must be accompanied by:
- present stage of completion;
- current photos of the property;
- reasons for the delay in completion;
- length of extension needed to complete;
- new appraisal
In addition, MidCountry Mortgage will require updated financial information to re-approve the loan. Additional fees apply for the extension request.
MidCountry Mortgage does not escrow for property taxes and homeowner’s insurance during the construction phase; you will be required to pay property taxes and homeowner’s insurance premiums as they come due.
For your permanent loan, waiving is possible under certain circumstances. We will discuss available options with you.
No. The permanent loan balance will be reduced to reflect any remaining unused funds.
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