Construction Loans

A “one-time-close” construction loan combines the three phases of a traditional two-time close loan into a single, streamlined process. With this arrangement, both interim and permanent loan financing are closed prior to construction. In essence, Capital City Home Loans acts as both the interim construction lender and the permanent mortgage lender.

 

The three phases and major milestones within each phase include:

1. Builder Phase - Choose an eligible builder and execute a cost-to-construct document (purchase contract).
2. Construction Phase - As construction progresses, funds are disbursed to your builder in phases as outlined by your draw disbursement schedule. Before draw funds are disbursed at the end of each build phase, an inspection is ordered to verify work has been completed. You will need to obtain Builders Risk Insurance to cover the home while it's being built. Once the home is complete and before the loan converts to permanent financing, you will be required to obtain a 12-month prepaid homeowners insurance policy. 
3. Modification Phase - Before beginning to occupy the home, you have an opportunity to choose a different type of loan.

During the Builder Phase, the borrower selects a builder, and Capital City Home Loans reviews their eligibility. Then, a cost-to-construct document (purchase contract) is prepared and executed by all parties involved in the loan. 

Depending on the loan program, homebuyers may request an extension approved initially at 6 months, with a fee.

Homebuyers may not have to requalify if the following conditions were met at the time of the original closing:

• Down payment of at least 5% (95% loan-to-value ratio)

• Minimum 700 credit score

• Credit reports, income documents, and appraisals not exceeding 12 months

Yes, Builders Risk insurance is required during construction. Additionally:

• If the property is in a Special Flood Hazard Area (SFHA), Coastal Barrier Resources System (CBRS), or Otherwise Protected Area (OPA), flood insurance is required.

• Once the house is complete and before the loan converts to permanent financing, a 12-month prepaid homeowners insurance policy is required.

No, changes cannot be made to the loan amount after closing. Any upgrades or overages must be paid by the borrower.

Yes, under the following conditions:

• If you request to cancel MI in conjunction with a principal reduction, an appraisal is required at the borrower’s expense.

• If you request to cancel MI without a principal reduction, refinancing with a new application is required.

Note:

• Purchases must curtail based on the lesser of the sales price or appraisal value.

• Refinance LTV is based on the new appraisal value.

Contact your mortgage consultant for assistance.