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Construction Financing
 The American dream may be home ownership, but imagine if you were able to start that dream with a vacant piece of land and turn it into your custom dream home. Well, if you would like to turn that dream into reality than you found the right people. Eagle can help you through every step of the construction process, from acquiring the right parcel of land, designing your dream home, and to financing the purchase of the lot and the cost of constructing the home.
Today’s construction loans make it easier than ever to build your dream home. For many that dream was not attainable because the down payment requirement on new home construction loans were typically too high to fit their budget. That is not the case anymore as with our current custom construction loans we have the ability to finance up to 95% of the future value of your project. So, whether you plan on building a custom home from the ground up or if you would rather re-habilitate a property into your dream home, we have the financing to help you obtain your construction goals.
What is a construction loan and how does it work?
A construction loan is a series of reimbursements paid in draws to your builder as your construction project is brought to reality. Once all disbursements have been paid and your project is complete, the construction loan will be modified into a permanent home loan of the mortgage program that you choose. These construction loans are referred to as one-time-close construction loans, as you will only be required to pay closing costs once. No fees are required to be paid at the time of the modification of your construction loan into a permanent home loan. So, you can finance the initial purchase of the land (or the payoff of a land loan if you already have taken title to the land) and the turn-key cost of building your new home and effortlessly convert to a permanent mortgage when your home is finished with just one set of closing costs.
Construction loans can finance the purchase of land, any land improvements (such as clearing, grading, utilities, driveway, etc.), city/county application and permit fees, construction costs, finishes in the home (such as carpeting, appliances, etc.), architects and engineer's fees, interest payments on the construction loan while the home is under construction (so you don’t have to make payments on your present home plus the home under construction if you do not wish to) and closing costs on the transaction. Eligible properties include one or two unit properties that are either single-family homes, condos, or townhomes. Modular homes, log homes and even one unit secondary residences are also eligible. One-time-construction loans may also be used for remodels, rehabilitations and re-starts.
Depending on whether you already own the land or if you will be purchasing the land with the construction loan, at the time of closing the loan funds the initial land purchase or lot payoff. Then, as your builder commences construction there will be periodic disbursements of additional funds to make progress payments to the builder. Interest will only be charged on the amounts disbursed. Also, as mentioned, an interest reserve can be set up so you don’t have to make a payment every month if you do not wish to.
During the construction period, the interest rate is usually tied to the Prime rate which may readjust on a monthly basis. However, if an interest reserve is set up then no payments are required. An interest reserve is not required, but it is recommended. If an interest reserve is not established then the borrower will be required to make payments of interest during the construction. Construction terms can be 6, 9, 12, or even 18 months.
Once the construction is finished, and occupancy of the new home is possible, the loan will modify to a permanent home loan of your choice. It may be a fixed or adjustable rate mortgage over the number of years you choose. Plus, you can even reduce your interest rate to the market rate at that time to lower your payments by using any extra reserves or unused amount of your construction loan!
Find out how easy it is to get financing for your particular construction project. Contact us today to get started. We have a full team of professionals ready to help you every step of the way, from the planning to the building of your dream home. We work hand in hand with local architects, civil engineers and builders to make sure that your construction plans are built out.
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