When is the down payment due on a construction to perminent financing?
Is it due at the end of the building and final close or up front before the first draw? Or otherwise?
- Anonymous1 decade agoFavorite Answer
I'll keep this simple (KISS). Any down payment is due at closing (when you sign loan doc's with a notary). Your monthly payments are on hold until the construction is complete. I am an experienced loan officer. I eat, sleep and breathe mortgage loans : ) I'd like to offer my expertise to you or anyone else who reads this and needs accurate information from a reliable source. Send me an e-mail and I will respond with my contact info. email@example.com Hope this helps!
- Anonymous1 decade ago
Usully the construction is due within 45 (varries)after final completion of all paper work(deed, ect), and the home owner, builder, builden inspection department,and bank are satified that all is well.
The company holdding the loan would than present you their own mortage application or in some cases simply sell the note to a mortage comapny which is binding to your original contract in such matters as interest rate, term of the loan, insurance ect.
Some times youir constrruction loan lender will just assume the note into payments per your request and if you are not happy you have time to find another lender( it;s best to already have the lender picked out). however at times the mortage company will come up with higher rates than agreed upon and you can obtain your mortage elsewhere.
Some times your mortage will be sold several times wiht in 10 years. Its according to how the market on money is driven up and down. Banks often make more money on buying and selling huge amounts of mortageing than they do actually holding mortages for 30 years. When mortage companies sense that interest will be moving one way or the other they began to move mortages .Source(s): school, life, experience with mortage brokers. family
- 1 decade ago
The down payment is usually due at the closing before the first draw. This is called a builder deposit. Keep in mind that there are a lot of banks out there that offer one-time closing construction to permanent loans.(this can signifigantly reduce your closing costs). Also, avoid mortgage brokers for these particular types of loans. (not alot of sense in paying a middle man when you can borrow directly from the bank) The top two construction to permanent lenders in the country are National City Mortgage and First Horizon. National city Currently offers prime +0 with no points on the construction loan, one time close plus a free rate cap with a no cost float down. I believe First Horizon is prime plus 1 with no points, one time close as well. p.s. avoid anyone who quotes Zig Ziglar unless you are buying a used car.
- szydkidsLv 51 decade ago
Banks are usually pretty flexible about this. Usually, the land is owned outright and is sufficient to get started. Draws can begin as work progresses or materials show up. Depending on the individual project, the land may be sufficient and the bank will loan for the full construction.