COASTAL’S GUIDE TOCONSTRUCTION-TO-PERMANENT FINANCING3 WAYSTO BUILDYOURDREAMHOMEFinance theconstruction of anew home on yourown lotFinance thepurchase of a lotand constructionCover the cost ofmajor renovationsto your existinghome
We MakeConstruction-To-PermanentFinancing SimpleBuilding a new home or completing a major renovation to your existinghome is a big commitment requiring time and money. At Coastal, we canmake things easier for you with our construction-to-permanent financing.Our program allows you to combine your construction financing and permanent mortgage into one loan, with a range of added benefits.At Coastal Credit Union, we’ll make the financing of your home construction costsclear and easy to understand. We will walk you through the construction-to-permanent loan process with attention and expert guidance at every step. You’ll savetime and money with one loan, one closing and one set of closing costs.Here’s How It WorksOur construction-to-permanent loan provides options for:1. Financing the construction of a new home on your lot.2. Financing the purchase of a lot as well as the home construction.3. Or, if you are completing a major renovation on your existing home, you can finance therenovation costs and current mortgage, if any, with one convenient loan.The Benefits of Coastal’sConstruction-To-Permanent FinancingWe’ll make sure you know upfront the financial aspects of building or renovating yourhome before you begin.Savings – Save time and money with one loan qualification and one set of closingcosts. And with North Carolina’s real estate transfer tax, our construction-to-permanent loan may save you hundreds of dollars if the locality bases the transfer tax onthe cost of the land alone.Convenience – Take up to 12 months for the construction of your home, andduring construction, you make interest-only payments on funds dispersed.Flexibility – Include lot financing or build on your own lot. You can builda primary residence, a second home or vacation home, or renovate anexisting home.Choices – Choose a fixed rate loan or a 5/1, 7/1 or 10/1 adjustablerate mortgage (ARM) as your permanent financing.
Get Pre-QualifiedTo get started, you’ll need to know how much homeyou can afford. This starts with applying to getpre-qualified for the total loan amount.If approved, this includes:1. An estimate of the total cost of the land (if youdon’t already own it).Let’s Get Started2. The cost of construction.Apply For The LoanJust like traditional mortgages, applying for construction-to-permanent financing involves reviewing your income, assets, liabilities, credit history,and the appraisal.We will also review the plans, specs, and build contract which may add a few extra days to the process.We will let you know of any specific informationthat you’ll need to provide throughout the process.
The Construction-To-Permanent Loan ProcessProcessing the LoanAfter we receive your completed mortgage application, we’ll send you disclosures that include important details about your loan and the processingof your loan.One of the disclosures is called ”Agreement forConstruction Draws”, which will need to be signedby you and your builder. Be sure to read this document carefully as it includes valuable informationabout the disbursement procedures.To make sure we process your mortgage efficiently,be sure to provide us any required documentationor information in a timely manner. We’ll order anappraisal after we’ve received the plans, specs, andthe contract. It is important this is fully executedbetween you and your builder to ensure the valueof the property is properly appraised.Be sure to let your Coastal mortgage loan officerknow if you pay any additional fees or deposits di-rectly to your builder while your loan is being processed. This is so you can receive the proper creditfor the payment at loan closing. If the constructionof your home requires additional funds in excess ofthe loan amount, you must provide these funds tous at closing.Closing the LoanThe closing process for a construction-to-permanent loan is similar to the closing process for anyother mortgage. However, at closing, fees will becollected for the inspections that will take place atvarious times during the construction phase.An inspection is required before each draw disbursement to the builder. If more inspections arerequired beyond what was collected for at closing,you will be billed separately for the additional fees.
The Construction PhaseThe Initial ConstructionDisbursementThe initial construction disbursement cantake place at closing or sometime after closing. If you personally contributed funds atclosing we will disburse these funds first before using your loan proceeds.Disbursements DuringConstructionThe construction loan funds are disbursedperiodically during construction as work iscompleted and verified by inspection.Disbursement requests are typically madeby the builder. You will, however, be required to authorize the builder’s ability torequest the funds.We will order an inspection when we receive a disbursement request. Funds aregenerally disbursed within 5 business daysfrom the date of request. The amount ofthe disbursement is based on the workcompleted, as specified in the inspectionreport.Interest Payments DuringConstructionWhile your home is under construction orrenovation, you will be billed monthly forinterest-only on funds already disbursed.During construction, we will not collectescrow for your real estate taxes, hazardinsurance or, if applicable, flood insurance.You will be responsible for paying any billsyou receive from your local tax authorityor insurance provider.Transitioning To The Permanent PhaseOnce construction is complete, we will needcertain information/documents in order todisburse the final draw and transition yourloan to the permanent phase.Modifying the LoanWhen you enter the permanent phase, ifthe terms of your loan have changed in anyway, you will need to sign a ModificationAgreement. If you do not use your entireloan amount, your note will be modified toa lower principal balance.Mortgage Payments During thePermanent PhaseOnce your loan transitions to the permanent phase you will begin makingmonthly principal and interest payments. Your new mortgage paymentmay also include escrow for your realestate taxes, hazard insurance, floodinsurance, and PMI, if applicable. Youwill receive notice from us with a breakdown of your new monthly mortgagepayment.
A Step-By-Step LookHere is a brief overview of what you can expect during the stages of your construction-to-permanent loan.Meet with Coastal Loan OfficerFirst, meet with a Coastal Loan Officer to discussloan programs and the pre-approval process.Your loan officer will navigate the pre-approvalprocess with you, outlining the items needed fora formal pre-approval. Once received and processed, the pre-approval letter is issued.Pre-Plan with a BuilderSit down with a builder/architect to discuss plansfor your new home. The size, style amenities andcosts should be discussed at this time. This iswhere you’ll agree upon the start time and completion time frames for the construction.Sign Final Construction ContractAll design, specs and price for the home are finalized and the construction contract(s) are signed.You’ll meet with your Coastal loan officer to finalize the loan application, builder approval, and appraisal. Upon approval, a loan commitment is issued and a closing date is set for your new home.Construction Loan ClosingNext, you’ll close with a real estate attorney. Ifyou do not already own the lot, this is when thepurchase is made. Coastal will set up a construction loan account to ensure sufficient funds areavailable for the completion of construction.Builder Starts ConstructionNow the construction of your home begins. Thebuilder will request periodic draws as constructionproceeds. After you authorize a draw, Coastal willdisburse the funds to the builder per the terms ofthe agreement.Interest Payments BeginAs funds are advanced, interest begins to accrueon what you have already approved. Coastal willbegin sending interest due monthly statements.As the builder requests additional draws, morefunds will be used and more interest will be due.Your New Home Is Now Completed!Upon completion of construction, the builder willrequest the final draw. You and the builder willreconcile all change orders that took place duringthe building process. You’ll need to pay any overage at this time. Next is the final draw, which is aminimum of 10% of the loan amount. Upon finalinspection confirming construction, a Certificateof Occupancy, and your authorization, the finaldraw funds will be released to the builder.Permanent Mortgage ModificationIt is at this point your interest only payment ismodified to fully amortizing payments of theterms agreed upon at closing or to a fixed rateoption. Within a month or two, your principal andinterest payments will begin. Congratulations,you successfully completed the one-time closeconstruction-to-permanent mortgage loan. Enjoy your new home!
“We’ll look after your needs to make sure you getthe best Construction-to-Permanent financing.”Marty Pell, SVP, Chief Lending OfficerGet your plans in motion.It’s never too early to explore your options, so talkwith a Coastal Loan Officer today.COASTAL24.com/MortgageAll loans are subject to approval.
Building a new home or completing a major renovation to your existing home is a big commitment requiring time and money. At Coastal, we can make things easier for you with our construction-to-permanent financing. Our program allows you to combine your construction financing and perma-nen