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Construction/Renovation Lending Programs

• Owner occupied allowed to 95% of Future Value (which typically means no down payment needed from borrower)
• 12 month construction term allowed (longer terms available by exception)
• 2nd Homes allowed to 85% of Total Acquisition
• Long term locks available (15 months max using Extended Lock Program)
• No investment properties or spec homes allowed
• One unit single family only (owner occupied 2 units by exception only)
• Licensed General Contractor required ** Licensed Owner/builder by exception only
• Qualify only once, re-qualifying at modification NOT required.
• New construction and remodels allowed
• Stated Income Permanent Loan Programs available 80/10/10 and 80/15/5's available

Construction Lending Fees

• Construction Lending Fee $700;
• Title Update $100;
• Modification Fee $100;
• Inspection Fee $100 per Draw

Extended Lock Options

RATE add-on's to current 60 day "lock-in" price, with "One Time Float Down Option" for a lower rate if rates drop after lock-in.

• 120 Days lock: add .125 to selected rate
• 180 Days lock: add .125 to selected rate
• 270 Days lock: add .250 to selected rate
• 360 Days lock: add .375 to selected rate
• 450 Days lock: add .500 to selected rate

* There is a one time float down option allowed within 60 days of project completion or lock expiration. The float down is priced using the current 60 day price, even if you are within 30 days of closing. If at completion, the construction loan doesn't modify to a permanent loan and is paid off, a 1% cancellation penalty is added to the payoff.

Loan must be fully approved (credit & construction) & scheduled to close prior to locking loan

OTC Program Information & Highlights

• No seasoning required on ownership of property if borrower hires a Licensed Residential General Contractor
• The One Time Close (OTC) is a permanent loan product consisting of construction and permanent financing combined into one loan. This allows the borrower to reduce the expense of two closings for the building or remodeling of their home.
• All OTC loans are interest Only during construction at selected prime rate, modify to permanent rate at completion
• Our renovation loans/construction-to-permanent loans can be used for the purpose of constructing a new home, or renovating an existing home. The loan can be closed at any stage of construction. What you generally need are:
• Complete a general contractor/builder information form (the homeowner typically cannot act as their own General Contractor; it's possible on an exception basis based on prior experience).
• Provide builder general liability insurance - $500,000 minimum
• Provide copies of the builder's license

General contractor / builder qualifications:

• Full-time builder or contractor
• Has been a builder for last two years
• Creditworthy
• Fully licensed (regulations are state specific)

What is required for project approval?

• Set of plans and specifications
• Fully executed fixed-price sales agreement
• Detailed construction-cost breakdown
• Lot survey or plot plan

Once the loan is approved and ready to close:

• A mandatory pre-closing conference call will be scheduled between the OTC office, borrower and builder

Closing process:

• Proof of "Builders Risk Insurance" must be provided showing a minimum coverage of loan amount or replacement cost
• A disbursement of up to 10% of the costs can be disbursed at closing, minus any deposits paid
• Once the loan is closed, the loan amount cannot be increased

When does the construction loan term begin?

• The construction term begins on the date the loan closes
• Loan funds are disbursed based on items completed

How does the disbursement process work?

• Homeowners insurance and flood insurance (if applicable) must be in place prior to first draw
• The draw disbursements are based on the percentage of work completed, and no draws are allowed on stored material
• All draw requests must be submitted utilizing the Draw Request Form
• Once all documentation is received, the bank will order the inspection of the property, and the draw is released based on items completed
• Draws are paid one of two ways: wired directly to the builder or by joint check to the builder and the borrower

Final stages of construction:

• At 80% of construction's completion, a letter will be sent to both the borrower and the builder outlining the steps required prior to disbursing the final draw
• Any additional draws will cease until all of the required documentation showing the project is 100% complete
• Loan then modifies into the borrower's permanent mortgage, based on rates available at that time, or a pre-determined rate if the interest rate was locked in advance of the completion of the project.